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Horngren'S Financial And Managerial Accounting
Found in: Page 525

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Short Answer

How do land improvements differ from land?

Yes, Land and Land improvements differ from each other.

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Step by Step Solution

Step 1: Meaning of Land and Land improvement

The Land is the tangible asset of a business. Land improvement means making some changes to the Land to make it ready for use.

Step 2: Difference between Land and Land improvement

Cost of Land includes the entire amount paid to acquire the Land like purchase price, commission, brokerage, etc. On the other hand, the Cost of Land improvements include expenses on fences, paving, etc. No depreciation is calculated on Land because it has an indefinite life. While Depreciation is charged on Land improvements as it has a definite life.

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