Land is not depreciated, since it has an unlimited useful life. If land has a limited useful life, as is the case with a quarry, then it is acceptable to depreciate it over its useful life. If the cost of land includes any costs incurred for site dismantlement and/or restoration, then depreciate these costs over the period over which any resulting benefits are obtained. If an entity acquires a parcel of land which includes a building, then separate the two assets and depreciate the building.
Current assets, such as accounts receivable and inventory, are not depreciated. Instead, they are assumed to be converted to cash within a short period of time, typically within one year.
In addition, low-cost purchases with a minimal useful life are charged to expense at once, rather than being depreciated. Given their low cost, it is not cost-effective to maintain them in the accounting records as assets.
