Land is such an asset whose value goes on increasing unlike other assets whose value gets reduce over a period of time. depreciation is charged on assets so that when in future asset will be replace we will have money to purchase new asset. But in case of land this not happens that is why depreciation is not hcarged on land
Depreciation is charged to keep the asset intact with the market value of the asset. Value of assets will decrease due to the usage and also because of the efflux of time. Because of the above said reason value of the asset will be reduced every year by way of depreciation. Rate of depreciation amount and method will be adopted because of the regulations and convenience. In case of land the value is keep on increasing and hence we are not providing for depreciation. If the value decreases definitely it should be recognised in the books by way of depreciation. We cannot provide for appreciation because it is a notional profit.
Land is such an asset whose value goes on increasing always unlike other assets whose value gets reduce over a period of time. depreciation is charged on assets so that when in future . But in case of land this not happens that is why depreciation is not charged on land
For calculating depreciation you need to know the life of the assets. i.e. How long the asset will be used. As far as land is concerned there is no estimated life available. Hence we cannot depreciate land.
Depreciation aims to spread the cost (or value) of an asset over it's economic useful life (i.e. the preiod over which it is to be expected to be used up). The reason land is usually not depreciated is that the land itself does not get used up. There are some exceptions to this rule (e.g. quaries are depreciated as the land does get used up).
First of all Land is a fixed asset. Like all fixed asset we dont depreciate on land as we do on other fixed asset like building or vehical. Its because all the other asset we use and depreciate is likely to have a total year of life time or total number of product it can produce or can cross definite number of kilometers (for car). But you can not count the life time of land or total amount of production. We also depreciate other asset on what will suppose to be future market value. But as we know land dont usually lose its market value. But if on some aspect land lose its market value we can use DEPLETION a/c to depreciate the land. Its not actually depreciating the land but adjusting with present market value.
So this is the reason why we dont depreciate on the land.
