DETERMINING COST OF

LAND:
When acquiring land, certain costs are ordinary and
necessary and should be assigned to Land. These costs
include the cost of the land, title fees, legal fees, survey
costs, and zoning fees. Also included are site
preparation costs like grading and draining, or the cost
to raze an old structure.
All of these costs may be considered
ordinary and necessary to get the land
ready for its intended use. Some costs
are land improvements. This asset
category includes the cost of parking
lots, sidewalks, landscaping, irrigation
systems, and similar expenditures. Why
separate land and land improvement
costs? The answer to this question will
become clear when depreciation is
considered. Land is considered to have
an indefinite life and is not
depreciated. Alternatively, parking lots,
irrigation systems, and so forth do
wear out and must be depreciated.