Title: Land improvements depreciation | WIKIACCOUNTING
Headings: Land improvements depreciation
Land improvements depreciation
What is the land improvement?
Accounting treatment
Depreciation
Conclusion

Content: Demolishing a building also has an impact on the value of the building and not the land. Other improvements to land, for example, adding elements to it can qualify as improvements. For instance, if a company installs drainage and irrigation systems, landscaping, parking lots, driveways, walkways, outdoor lighting, or fencing, it can recognize it as a land improvement. Almost all these items have limited lives and, therefore, the company must depreciate them. Accounting treatment
The accounting treatment of land improvements comes under the accounting standard for property, plant and equipment. Companies need to calculate all the costs that go into these improvements. However, they must ensure these expenditures are of capital nature. The initial measurement of the cost of these improvements includes all costs involved in bringing the improvements into working condition. Once companies measure the initial cost of the improvement, they can use the following journal entry to record the land improvement in their accounts. Dr
Land improvements
x
Cr
Cash or bank
x
The land improvements represent a fixed asset for a company, which will appear in its Balance Sheet.