Depreciation of land in accounting, is land depreciated or not?

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A land plot can be taken into account as a fixed asset if the appropriate conditions are met for it.

Is land depreciated in accounting?

Act OS-1 “On the acceptance and transfer of fixed assets (except for buildings and structures).” The document contains a number of indicators that should be ignored (crossed out) when filling out: manufacturer, depreciation rates, useful use, residual value, etc. At the same time, there are no special columns containing the characteristics of the land plot.

Accounting and taxation of transactions with land plots

According to current legislation, the cost of fixed assets is repaid through depreciation. However, due to the fact that the land plot is a non-depreciable property, depreciation is not charged on it. There is no other procedure for attributing the cost of a land plot to expenses. The situation is similar in tax accounting.

Depreciation is not charged for land plots - this norm is enshrined in clause 17 of PBU 6/01. This category of assets also includes environmental management facilities with museum exhibits. The fact that the life of a land allotment is reflected in the accounting policy cannot become a basis for violating the rules of PBU.

Revaluation of fixed assets

Conducting a revaluation is a right, not an obligation of the organization. In other words, the company may refuse revaluation. If the corresponding decision is made, then the operating system will have to be revalued annually as of December 31. Revaluation is carried out in relation to all fixed assets included in the group of homogeneous objects.

As a result of revaluation, the value of an object can either be reduced (depreciation) or increased (revaluation). The changed cost is called replacement cost.

The accountant reflects the results of the markdown on account 91 “Other income and expenses.”

The postings will be as follows:

DEBIT 91 CREDIT 01 - reflects the amount of depreciation of the object DEBIT 02 CREDIT 91 - reflects the amount of depreciation adjustment made based on the results of the depreciation.

If in subsequent periods the same object is again revalued by the same amount, then the amount of the revaluation must be shown on the credit of account 91.

The accountant credits the results of the revaluation to additional capital and reflects it on the credit of account 83.

The postings will be as follows:

DEBIT 01 CREDIT 83 - reflects the amount of revaluation of the object DEBIT 83 CREDIT 02 - reflects the amount of depreciation adjustment as a result of revaluation.

If in subsequent periods the same object is marked down, then the amount of the markdown must be attributed to the reduction of additional capital and reflected in the debit of account 83. The markdown, which in magnitude exceeds the initial revaluation, must be partially written off as a decrease in additional capital, and the remaining amount must be reflected in the debit of the account 91.

For fixed assets that are revalued annually, the amount of depreciation is calculated based on replacement cost, not original cost.

Is depreciation charged on land?

Land – depreciation group 7, if the territory belongs to landfill sites. This conclusion can be drawn according to international standards for conducting accounting operations. The areas located under buildings are not included in the depreciation group of assets. The cost of such plots does not affect the amount of depreciation charges for structures located on their surface. The accountant must organize separate accounting of the land and other fixed assets located on it.

Is depreciation charged on land?

You can take into account the costs of purchasing a land plot only when selling it later. Then, on the date of transfer of the plot to the buyer, the seller of the land reflects the income from the transaction, reduced by the cost of acquiring the plot and expenses for its sale (Articles 271, 268 of the Tax Code of the Russian Federation).

Is it calculated in tax accounting?

In this case, this period cannot be less than 5 years . Or include in the tax base a share of the costs of purchasing a plot in the amount of 30% of the entire base for the previous period and thus act until the costs are fully paid off. This assumption in tax legislation leads to discrepancies between accounting and tax accounting and, accordingly, permanent tax differences.

In the recommendation, read about the criteria by which property is classified as fixed assets in accounting and tax accounting. Also see how to distinguish fixed assets from inventories, as well as what criteria a company can set itself to account for an asset as a fixed asset.

Useful life

One of the important characteristics of a fixed asset is its useful life. This is the period during which the object generates income for the organization. The organization determines it independently.

There is a classification of fixed assets, approved by Decree of the Government of the Russian Federation dated January 1, 2002 No. 1. In it, all fixed assets are divided into groups, and for each group a lower and upper limit on the useful life is specified. For example, computer equipment is classified in the second group with a useful life of two to three years inclusive.

For accounting purposes, the use of this classification is voluntary, and for tax accounting purposes it is mandatory. Therefore, in order to bring the two types of accounting as close as possible, most companies, when assigning a useful life in accounting, are also guided by the classification.

For complex objects consisting of several parts, the useful lives for each component may differ significantly. In this case, each part must be taken into account as an independent fixed asset.

Depreciation of land

Additional clarification: Will the land plot still be listed on account 01? We are not going to sell; depreciation is not charged on the land plot. Answer: For depreciation purposes, the asset should be classified as a separate structure with a specified useful life.

Accounting for depreciation (depreciation) of fixed assets

It should be noted that depreciation will be charged on fixed assets in inventory in accordance with the rules of regulations. Therefore, it follows that assets are not depreciated if they are carried in other accounts. Assets for which depreciation is charged are accounted for in account 01 “Fixed Assets” and 04 “Intangible Assets”. Depreciation represents the depreciation of a company's assets as of a specific date. Any property of an enterprise has a useful life (SPI). The property is depreciated once a month, and the purchase price of the property is taken into account. Then, in order to recognize property as depreciating, it is necessary to check it according to four criteria. If one condition is not met, then depreciation will not be charged. In this article we will consider in which cases depreciation is not accrued and how business transactions are reflected in accounting and tax accounting.

Important However, among owners who have purchased land, the question often arises: is it necessary to depreciate the cost of land and whether it is possible to reduce the taxable profit of the company in this way. You will find answers to these and many other questions regarding land depreciation in our article. Land as an object of fixed assets In accordance with the provisions of the Tax Code, land plots are recognized as objects of fixed assets. The basis for reflecting land in the balance sheet can be contracts of purchase and sale, exchange, or gratuitous use.

Normative base

In 2021 and earlier, organizations used PBU 6/01 “Fixed Assets” to account for fixed assets.

In 2021, companies have a choice. They have the right to continue to apply PBU 6/01, or switch to the federal accounting standard FSBU 6/2020 with the same name (see “What will change in the accounting of fixed assets: read the new FSBU 6/2020”).

Starting from 2022, all organizations must be guided by FSB 6/2020. In this case, PBU 6/01 becomes invalid.

This article sets out the principles enshrined in PBU 6/01.

Is the land depreciable or not?

Repayment of the valuation of fixed assets through depreciation is regulated by the norms of PBU 6/01. The document provides a list of assets that are not subject to depreciation. These include objects for which:

Which group of fixed assets does the land belong to?

In this article we will look at: depreciation of land in accounting and tax accounting. Let's find out whether it is possible to calculate depreciation of the asphalt pavement. We will answer your questions. Companies acquiring land on a property basis are required to reflect the land on their balance sheet in accordance with the procedure for accounting for fixed assets.

An asset may be recognized in parts, each of which is depreciated separately. To calculate depreciation, parts that have the same useful life can be grouped (paragraph 45 of IAS 16).

Example 10 . The organization acquired a plot of land with a building. The total acquisition cost is RUB 33,000,000. The cost of the land plot is 30,000,000 rubles, the cost of the building is 3,000,000 rubles. The organization depreciates the building over 30 years at 100,000 rubles. Every year. The land does not depreciate.

Depreciation of land and buildings

The mine's operational life is ten years, after which the land will be used in another capacity. The cost of preparation for operation and reconstruction is 500,000 rubles. and must be depreciated over ten years (the useful life of the mine).

Tax accounting involves the formation of depreciation deductions linked to depreciation groups. The list of such groups and their features are established by Art. 258 Tax Code of the Russian Federation. A breakdown of the classification characteristics and the exact service life for each category of fixed assets are given in government decree No. 1 dated 01/01/2021.

What is an inventory object

This is the unit of accounting for fixed assets. An inventory object can be a separate item (for example, a cabinet), or a complex of structurally articulated items that constitute a single whole. Such a complex consists of several objects with common fixtures and accessories, mounted on the same foundation. They may have the same or different purposes. The main thing is that each item can perform its functions only as part of the complex, and not independently.

The accountant assigns each inventory item its own inventory number and creates a separate card. There is a unified form - form OS-6 (approved by Decree of the State Statistics Committee of Russia dated January 21, 2003 No. 7). In 2012 and earlier, the use of this form was mandatory. Starting from 2013, organizations have the right to develop and approve their own form of inventory card for accounting for fixed assets.

In practice, many questions arise regarding how to correctly take into account the various components of a computer: processor, monitor, printer, mouse, etc. Officials believe that all of the listed devices belong to one object (see, for example, letter of the Ministry of Finance of Russia dated November 6, 2009 No. 03-03-06/4/950). But some experts hold a different point of view and believe that since the computer parts are not mounted on a single foundation, they can be counted as separate objects. This approach seems to us to be the most correct. (Also see “Accounting for complex objects: depreciate or write off at a time?”).

Is depreciation charged on land?

The involvement of land plots in economic circulation, in particular, is: But the state registration of the right of permanent (perpetual) use of land plots and their registration in the cadastral register cannot be considered as grounds for accepting such land plots for balance sheet accounting.

Territories located under buildings are not included in the depreciation group of assets

State revaluation of the cadastral value of land plots and other real estate, according to the Law, occurs once every 5 years. However, this does not mean that next time the valuation of your property will approach the market value and you just need to wait. On the contrary, it's time to act!

However, when applying these legal norms in terms of recognizing the value of land plots, it is necessary to take into account that neither the legislation of the Russian Federation nor regulatory (non-regulatory) legal acts contain criteria for determining the date of commissioning of land plots.

However, by virtue of clause 2 of Art. 256 of the Tax Code of the Russian Federation, land and other environmental management objects (water, subsoil and other natural resources), along with inventories, goods, capital construction projects in progress, securities, and financial instruments of futures transactions are not subject to depreciation. Consequently, according to the author, land plots are not depreciable property. Does this mean that they should not be considered fixed assets? The answer is ambiguous due to the uncertainty in the provisions of the Tax Code.

If you follow the legislative documents, then there should be no distortions or errors in the calculation of depreciation in the accounting. It is worth considering that the legislative framework is constantly changing, so the chief accountant is obliged to monitor changes and be responsible for the actions of his subordinates.

Which depreciation group does the land belong to?

Regardless of the depreciation method established by the taxpayer in the accounting policy for tax purposes, the straight-line depreciation method is applied to buildings, structures, transmission devices, and intangible assets included in the eighth to tenth depreciation groups. The accrual of depreciation stops on the first day of the month following the month in which the cost of the object is fully repaid or the object is written off from the register.

Is depreciation charged on land or not? This question arises in connection with the classification of land assets as fixed assets. Fixed assets are characterized by gradual obsolescence in terms of physical and consumer parameters. In order for the enterprise to have the opportunity to renew its non-current resources, a maximum service life is established for each asset, within which depreciation charges are made annually.

The useful life of a land plot can be limited only if there is evidence of deterioration in consumer properties over time. This rule cannot be applied to asphalt pavements. Such assets are not involved in production activities and are not part of buildings or structures. They are classified as landscaping elements.