Under GAAP, how should nondepreciable capital assets be reported?

Nondepreciable capital assets should be reported separately from depreciable assets under GAAP. This practice is crucial because it provides clarity and transparency in financial reporting. By distinguishing between nondepreciable and depreciable assets, stakeholders can more easily assess the values and impacts of each category on the financial position of an organization.

Nondepreciable assets, such as land, do not lose value over time and therefore do not require depreciation expense to be recorded against them. This fundamental difference necessitates their separate classification to prevent confusion regarding the nature of the assets and their treatment in the financial statements. Additionally, reporting them separately supports more accurate financial analysis and enhances users’ understanding of the capital structure of the entity. Compliance with this reporting requirement further aligns with the principles of comparability and consistency that are central to GAAP.