Depreciation is a common part of accounting. It’s how you track the loss in value of things your business owns—like laptops, vehicles, or machines. But not everything can be depreciated.
So, which assets cannot be depreciated, and why?
Let’s make it simple.
What Is Depreciation in Accounting?
Depreciating assets meaning:
Depreciation is the process of spreading the cost of a physical asset over its useful life. For example, if your company buys a delivery van, you’ll spread its cost over several years because it loses value with use and time.
Non-Depreciable Meaning: What Assets Cannot Be Depreciated?
Some assets don’t wear out or lose value the way physical items do. These are non-depreciable assets.
Here’s a quick list of assets that cannot be depreciated:
1. Land
Is land a depreciable asset?
No. Land isn’t depreciated because it doesn’t wear out, get used up, or become obsolete. It typically retains or increases in value over time.
💡 Tip: Land improvements like fences, parking lots, or drainage systems can be depreciated because they do deteriorate.
2. Artwork and Collectibles
Art, antiques, and collectibles don’t have a predictable useful life and often appreciate in value. That makes them non-depreciable.
3. Goodwill
Goodwill comes into play when one company buys another for more than the value of its tangible assets. It’s considered an intangible asset with indefinite life, so it isn’t depreciated—but it can be impaired.
4. Trademarks and Intangible Assets with Indefinite Life
If a trademark or brand name has no set expiration, it can’t be depreciated. However, if it has a finite legal life (like 10 years), you can amortize it, which is similar to depreciation for intangible assets.
5. Personal-Use Property
If you’re using something personally (like your home TV or your weekend car), it’s not considered a business asset and therefore not depreciable for business accounting or tax purposes.
6. Inventory and Supplies
Inventory is meant to be sold, not used over time, so you expense it as cost of goods sold, not depreciate it.
Also Read: Non-Fixed Assets: Definition, Importance, Formula & More
Examples of Depreciable Assets
What assets can be depreciated? Here are some depreciable assets examples commonly found in businesses:
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Office buildings
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Furniture and fixtures
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Equipment and machinery
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Company vehicles
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Computers and tech gear
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Manufacturing tools
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Land improvements (like fencing or driveways)
These assets must:
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Be owned by the business
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Be used in business operations
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Have a useful life longer than one year
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Lose value over time
Also Read: Depreciation Method Comparison: Which Is Right for Your Business?
FAQs: Quick Answers to Common Questions
1. Is land a depreciable asset?
Nope. Land isn’t depreciable because it doesn’t wear out or have a limited useful life.
2. Can I depreciate a leased asset?
Generally, no—but you may be able to amortize leasehold improvements.
3. Can I depreciate software?
Yes, but it depends. Purchased software can often be depreciated or amortized over a set period, typically 3–5 years.
Wrapping It Up: What to Remember
Not every asset can be depreciated. In short:
Depreciable = assets that wear out
Non-depreciable = assets that don’t
If you’re handling your business accounting manually or in spreadsheets, tracking all this can get messy.
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