If an asset has an unlimited life, what happens to its depreciation?

When considering assets with an unlimited life, it's important to understand the nature of depreciation in relation to the asset's life span. An asset with an unlimited life is not subject to depreciation because depreciation is a method used to allocate the cost of an asset over its useful life. Since such an asset is not expected to have a limit on its useful life, there is no corresponding need to expense its cost gradually over time.

In accounting, assets such as land are often considered to have an unlimited life and therefore do not depreciate. Instead, they may remain on the balance sheet at their original cost indefinitely. As a result, treating these assets in this manner aligns with accounting principles, which state that depreciation is only applicable to assets that have a determinable lifespan that will eventually end. Therefore, if an asset has an unlimited life, it is regarded as not depreciated.