Are sidewalks and paving costs capitalized under U.S. GAAP?
Yes, but they are considered a land improvement and not part of the capitalized land cost. The reason that it is important to make this distinction is that land is not depreciated, but land improvements are depreciated over their useful life.
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What is the difference between land and land improvements under U.S. GAAP?
Both land and land improvements costs can be capitalized, but only land improvement costs are depreciated. The visual below lists out costs that are classified as land costs and costs that are classified as land improvement costs:
What is the journal entry to record an asset purchase that includes both land and equipment?
The key thing to understand is that the total purchase price is allocated between land and equipment based on the appraisal value from the bank. As you can see in the visual below, the total was appraisal value from the bank was $800. So, for land, we would divide $300/$800, which equals 37.5%, and multiply […]
Is land depreciated?
Nope! Land will have an indefinite life, and will therefore, not be depreciable. Land should be separately valued and reported on the balance sheet from any buildings on the land. It is important to understand the difference between land and land improvements. The visual below lists out costs that are classified as land costs and […]