Title: How to account for land improvements — AccountingTools
Headings: 
How to account for land improvements
Content: 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. Examples of land improvements are: Drainage and irrigation systems
Fencing
Landscaping
Parking lots and walkways
A special item is the ongoing cost of landscaping. This is a period cost, not a fixed asset, and so should be charged to expense as incurred. Debit
Credit
Land
1,000,000

Cash

1,000,000
ABC then razes a building that was located on the property at a cost of $25,000, fills in the old foundation for $5,000, and levels the land for $50,000. All of these costs are to prepare the land for its intended purpose, so they are all added to the land account with the following entry: