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Depreciation is the process of spreading the cost of tangible assets over the years they are expected to help generate revenue. Assets that wear out, become obsolete, or are consumed over time are depreciated to match their cost with the periods they benefit.

Land is not depreciable because it does not wear out or get used up over time; its value can change, but its physical life is effectively indefinite, so depreciation isn’t recorded for it. Buildings and machinery, on the other hand, lose value through use and age, so their costs are allocated over their useful lives. Livestock also have finite productive lives and are typically depreciated as well, reflecting the time they can contribute to production.

So, the item that is not depreciable on farm financial records is land.