Definition
The financial accounting term land is defined as naturally occurring resources such as soil and mineral deposits. Land is classified as a tangible asset on a company's balance sheet.
Explanation
Land is the only part of property, plant, and equipment that is not subject to depreciation. Since land has an unlimited term of existence, it does not depreciate over time; it is not consumed as part of normal business operations.
The cost of land should include all of the incidental expenses to acquire the property, such as real estate commissions, escrow, and surveying. Some improvements to land, for example landscaping or grading, are considered permanent; as such these improvements are not depreciated.
Improvements such as driveways and fencing are not considered permanent since they have a limited term of service. These improvements are subject to depreciation; therefore, these assets should not be included in the long term asset category of land appearing on the balance sheet.
Related Terms
- The financial accounting term property, plant, and equipment is used to describe assets of a long lasting nature, which are used in the normal operation of the company. The most common types of property, plant, and equipment are land, buildings, and machinery.
Moneyzine EditorSeptember 21st, 2023 
The financial accounting term intangible asset is used to describe those assets that lack physical structure (they cannot be seen or measured), and have a high degree of uncertainty surrounding future benefits to be derived from them. The most common types of intangible assets appearing on the balance sheet are goodwill, copyrights, trademarks, patents, franchises, and organization costs.Moneyzine EditorNovember 6th, 2024
In financial accounting, depletion is used to capture the decline in a natural resource such as petroleum, timber, and minerals. Natural resources subject to depletion can be identified by one of two features:Moneyzine EditorNovember 6th, 2024
