Sale In Lots
Accounting for the sale of land differs from the accounting for the sale of any other type of fixed asset, because there is no accumulated depreciation expense to remove from the accounting records. This is because land is not depreciated, on the theory that land is not consumed (as is the case with other fixed assets).
Unlike most traditional real estate, land for sale includes no buildings or structures. It only contains land. This can be an amazing opportunity to build your own home or property. If you have a specific idea for a home, you can build your home just as you want it by buying land to place it on. Find Lott, TX land for sale at realtor.com®. The median listing price of land in Lott is $211,577.
When you sell land, debit the Cash account for the amount of payment received from the buyer, and credit the Land account to remove the amount of land from the general ledger. Unless the buyer pays you exactly what you paid for the land, there will also be a gain or loss on sale of the land. If the amount of cash paid to you is greater than the amount you recorded as the cost of the land, there is a gain on the sale, and it is recorded as a credit. If the amount of cash paid to you is less than the amount you recorded as the cost of the land, there is a loss on the sale, and you record it as a debit.
Example of the Accounting for the Sale of Land
ABC Company buys a parcel of land for $400,000, and sells it two years later for $450,000. There is a gain of $50,000 on the sale, and the journal entry looks like this:
Mobile Homes For Sale In Lots
| Debit | Credit |
| Cash | 450,000 |
| Gain on sale of land | 50,000 |
| Fixed assets - land | 400,000 |
If ABC had instead sold the land for only $375,000, there would be a loss, and the journal entry would be:
| Debit | Credit |
| Cash | 375,000 |
| Loss on sale of land | 25,000 |
| Fixed assets - land | 400,000 |
Small Land Lots
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If you want to own your own property, you may want to consider not only homes but also cheap lands for sale. Unlike most traditional real estate, land for sale includes no buildings or structures. It only contains land. This can be an amazing opportunity to build your own home or property. If you have a specific idea for a home, you can build your home just as you want it by buying land to place it on. Keep in mind, too, that land is often priced inexpensively which makes it affordable. As a buyer, there are many reasons to buy cheap land. In many cases, land just outside of major cities is far less expensive than land in cities. It often makes a great place to build a haven that still puts you close to major amenities.
Investors Love Land
For investors, land is an attractive way to make money. Buying inexpensive land and then selling it to developers or builders is a good way to make a profit. Some investors also buy commercial land for sale in a desirable location and resell that land to businesses who wish to build commercial properties there.
Buying Land for Sale
When buying land, you may wish to find out how the land is zoned. If a specific piece of land is zoned for commercial use, you may have an easier time building commercial property there. Always check to make sure that you can build the type of property you want on the land you are buying. You can often find this information at the local city hall or courthouse. You may also want to have the land surveyed to ensure that you know what is on the land. Surveying will help you determine the limits of your property, as well.
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