Which fixed asset is not depreciated?

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Prepare for the CLFP Financial and Tax Accounting for Leases Exam. Test your knowledge with questions and detailed explanations. Boost your confidence and get ready to excel in your examination!

Multiple Choice

Which fixed asset is not depreciated?

Explanation:
Depreciation is the process of allocating the cost of tangible assets that have finite lives over the period they are used. Land is not depreciated because it generally has an indefinite useful life and does not wear out or become obsolete in the way that buildings, equipment, or vehicles do. When you buy property, you typically separate the cost between land and any structures; the building (and other depreciable improvements) gets depreciated, while the land portion does not. There are exceptions only for land improvements or certain circumstances that have a finite life, but the land itself remains non-depreciable. So the fixed asset that is not depreciated is land.

Depreciation is the process of allocating the cost of tangible assets that have finite lives over the period they are used. Land is not depreciated because it generally has an indefinite useful life and does not wear out or become obsolete in the way that buildings, equipment, or vehicles do. When you buy property, you typically separate the cost between land and any structures; the building (and other depreciable improvements) gets depreciated, while the land portion does not. There are exceptions only for land improvements or certain circumstances that have a finite life, but the land itself remains non-depreciable. So the fixed asset that is not depreciated is land.

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