Accounting for the sale of land differs from the accounting for the sale of any other type of fixed asset, because there is no accumulated depreciation expense to remove from the accounting records. This is because land is not depreciated, on the theory that land is not consumed (as is the case with other fixed assets).
When you sell land, debit the Cash account for the amount of payment received from the buyer, and credit the Land account to remove the amount of land from the general ledger. Unless the buyer pays you exactly what you paid for the land, there will also be a gain or loss on sale of the land. If the amount of cash paid to you is greater than the amount you recorded as the cost of the land, there is a gain on the sale, and it is recorded as a credit. If the amount of cash paid to you is less than the amount you recorded as the cost of the land, there is a loss on the sale, and you record it as a debit.
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Example of the Accounting for the Sale of Land
ABC Company buys a parcel of land for $400,000, and sells it two years later for $450,000. There is a gain of $50,000 on the sale, and the journal entry looks like this:
| Debit | Credit | |
| Cash | 450,000 | |
| Gain on sale of land | 50,000 | |
| Fixed assets - land | 400,000 |
If ABC had instead sold the land for only $375,000, there would be a loss, and the journal entry would be:
| Debit | Credit | |
| Cash | 375,000 | |
| Loss on sale of land | 25,000 | |
| Fixed assets - land | 400,000 |
