1. avatar says

    Hello John,

    Thanks for the wonderful presentation. I was wondering how depreciation on land is handled since its lifetime is not limited. If a company purchases a piece of land, how will its expense show in the income statement?

    • Avatar of John Moffat says

      Land is one of the few things (and probably the only thing as far as the exam is concerned) that we do not depreciate, because it has an unlimited life.

      Therefore no expense appears in the Statement of profit or loss. The land remains at cost in the Statement of financial position (unless it is revalued).

      Buildings on the other hand must be depreciated. It will usually be over a long time (50 or 100 years), but they have to be depreciated because they do have a limited life.

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