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Simerpreet
SimerpreetHelpful
In: 1. Financial Accounting > Miscellaneous

Is Land a Current Asset?

Is Land a Current Asset?
Current Assets
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    1. Astha Leader Pursuing CA, BCom (Hons.)
      2021-05-28T11:42:27+00:00Added an answer on May 28, 2021 at 11:42 am
      This answer was edited.

      No, Land is not a Current asset.

      Current Assets are assets that are expected to provide benefit to the company and convert into cash within one year. These help entities maintain liquidity.

      In short, we can say these Short term assets help in the day-to-day operations of an entity.

      Some common examples are Debtors, Inventory and Cash as they are liquid in nature.

      Land as a Current Asset

      Land is not a current asset but a fixed asset which is shown under the head Non-Current assets in the Balance sheet. Such assets are not sold or consumed by the entity but are held to produce goods and services.

      The full value of such assets will not be realized within one year; hence such assets are useful in the long run. The part of the value of these assets realized in one accounting year is charged as depreciation in the Profit and Loss Account. Such depreciation charged reduces the book value of the assets in the Balance sheet. Depreciation can be calculated as:

      depreciation formula

      Other examples of non-current assets are Machinery, Plant, furniture, etc.

      Land is presented in the Balance sheet as;

      depreciation on land shown in balance sheet

      Also, I would like to add that land is an exception to the concept of depreciation because it does not have a definite useful life so there is no way to depreciate it. Land is considered to have an indefinite life span. Unlike other non-current assets, the value of land tends to increase over time.

      Therefore, unless land is used for extraction purposes (i.e. for Mining, etc), charging depreciation on land is prohibited.

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    2. Bonnie Curious MBA (Finance)
      2021-06-27T05:34:33+00:00Added an answer on June 27, 2021 at 5:34 am
      This answer was edited.

      Similarly, someone asked Are loose tools current assets

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