Title: Cost of Land
Headings: Cost of Land
Cost of Land
Definition
Explanation
Related Terms

Content: Excavation of land to receive a building should be recorded as cost of buildings. Improvements: if an improvement will have an "indefinite" life, then it can be capitalized. This includes landscaping, lighting, drainage systems, and utility lines (water, sewer, electric, natural gas). Land is never depreciated. Improvements that are thought to have "limited" lives, such as a driveway or fencing, should be recorded in a Land Improvements asset account so they can be depreciated over their useful lives. If the company receives payment of any type while preparing the land for its intended purpose, those proceeds should be subtracted from the cost of the land. This can occur when a building is demolished and scrap metal or brickwork is recycled. Special assessments levied by local government such as roadwork, sewer lines, paving and street lights can also be included in land if the local government is responsible for replacement too. Related Terms
balance sheet, plant, property and equipment, cost of equipment, cost of buildings, self-constructed assets, accumulated depreciation, deferred payment contract