Home > Accounting Entries > Assets > Property, Plant and Equipment > Land
Definition:
Land is a long-term asset purchased for the purpose of business. It is a non-depreciable asset unless it is a leasehold asset. There can be two types of land, freehold and leasehold. Freehold is ownership for eternity and leasehold is leased out from its owner. In case any payments are made towards leasehold land, those needs to be expensed off over the period of lease term.
Accounting Entries:
Purchase of Land:
Land asset A/c DR
Cash/Bank A/c CR
Amount: Purchase price of land.
Sale of Asset:
Cash/Bank A/c DR
Loss on Sale A/c DR
Land Asset A/c CR
Gain on Sale A/c CR
Amount: If sale price > purchase price, then gain. If sale price < purchase price, then loss.