Land and buildings

Learning objectives

• Distinguish land from buildings in the cost of a property.L1, L2
• Calculate the depreciation of a property excluding the land.L2

Normative references

• IAS 16 §58Land and buildings are accounted for separately even when acquired together; land, which has an unlimited useful life, is generally not depreciated (exceptions: quarries, landfill sites); buildings are depreciated.
• IAS 16 §59Dismantling, removal and restoration costs included in the cost of land are depreciated over the period of benefits obtained.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• True or false? When an entity acquires land together with the building on it, it accounts for them as two separate assets and, as a general rule, does not depreciate the land.L1