CA Foundation · Accounting · Depreciation and Amortisation
Which of the following assets is NOT normally subjected to depreciation?
Freehold land used in business is normally not depreciated because it has an unlimited useful life and is not consumed through use. Vehicles, computers and buildings have limited lives, so they are depreciated. Only special land such as a quarry is depleted.
- AFreehold land held for business useCorrect
- BDelivery vehicles
- COffice computers
- DFactory buildings
Explanation
Freehold land generally has an unlimited useful life and is not consumed by use, so it is not depreciated. Vehicles, computers and buildings have limited useful lives and wear out or become obsolete, so they are depreciated. Land is depreciated only in special cases such as a quarry, where it is depleted.
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