Land

Code: 1211
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Account Information

Financial Statement Statement of Financial Position
Normal Balance Debit

Definition

Land owned by the company and used in operations

Note: This account may be broken down into sub-ledgers as needed (e.g., customer/supplier/bank names or branches).

Common Journal Entries

Purchased land for cash

Dr. Land
Cr. Cash in Hand

Purchased land on credit

Dr. Land
Cr. Accounts Payable

Sold land at a gain

Dr. Cash in Hand
Cr. Land
Cr. Gain on Sale of Assets

Revaluation of land upward

Dr. Land
Cr. Revaluation Surplus

📐 IFRS vs US GAAP Accounting Treatment

IFRS IAS 16 Property, Plant and Equipment
US GAAP ASC 360 Property, Plant and Equipment
⚠️ Key Difference Between IFRS and US GAAP

IFRS allows revaluation model; GAAP uses cost model only

❓ Frequently Asked Questions

Q: Is the Land account depreciated?

A: No, the Land account is not depreciated because land has an indefinite useful life (it does not wear out or get consumed with use). Unlike buildings, which have a limited useful life and are depreciated.

Q: How is a land purchase for cash recorded?

A: A land purchase for cash is recorded with the following entry: Dr. Land (for the purchase price), Cr. Cash in Hand or Bank Account (for the same amount). The land is added to fixed assets on the balance sheet.

Q: Can land be revalued?

A: Yes, under IFRS, land can be revalued to its fair value. The increase is recognized in Other Comprehensive Income (OCI) as a Revaluation Surplus within equity.

Q: What is the difference between Land and Investment Property?

A: Land is used by the company in its operations (e.g., factory site or headquarters). Investment Property is land owned to earn returns (rental income) or capital appreciation, not for operational use.