For which type of asset is the mid-month convention used?

The mid-month convention is primarily used for real property, which includes buildings. This convention assumes that assets placed in service are available for use in the middle of the month rather than at the beginning or end. This approach is particularly relevant for buildings due to the long useful life and significant investment associated with these types of assets. By using the mid-month convention, businesses can more accurately reflect the depreciation expense over the asset's lifespan, allowing for a systematic allocation of costs that aligns better with the asset's usage in generating revenue.

Vehicles, furniture, and land do not utilize the mid-month convention; instead, they typically follow different conventions where the asset may be considered placed in service based on the specific date they were acquired, leading to different calculations for depreciation. For instance, vehicles usually use the half-year convention, while land is not depreciable at all. Understanding the distinction in conventions helps ensure that financial statements accurately reflect the true economic condition and expense allocation for different types of assets.