Title: How to account for land improvements — AccountingTools
Headings: 
How to account for land improvements
Content: How to account for land improvements — AccountingTools
April 15, 2021
How to account for land improvements
April 15, 2021
/ Steven Bragg
Land improvements are enhancements to a plot of land to make the land more usable. If these improvements have a useful life, they should be depreciated. If there is no way to estimate a useful life, then do not depreciate the cost of the improvements. If land is being prepared for its intended purpose, then include these costs in the cost of the land asset. They are not depreciated. Examples of such costs are: Demolishing an existing building
Clearing and leveling the land
Also, note that land is not depreciated, since it does not have a useful life. Instead, it is considered to have a perpetual life. The only situation in which the depreciation of land is allowed is when its value is being depleted through the removal of natural resources. If functionality is being added to the land and the expenditures have a useful life, record them in a separate Land Improvements account.