Re: Problem with Asset Accounts by WB3FUP
WB3FUP
Sun Aug 31 20:19:43 CDT 2003
And He could title the account "Unrealized Gain on XYZ" (Whatever the Asset
Was). "Reserve" is a word that has specific connotations to accountants,
and this is not the place for them.
--
73 es cul
wb3fup
a Salty Bear
"AJM" <sendnospam@btinternet.com> wrote in message
news:bittr1$rct$1@hercules.btinternet.com...
> Hi Dale,
>
> It seems to me that you are going about this in the wrong way. The only
> figure that is certain is the purchase price of a property (or more
> specifically the total acquisition cost) and that is the balance you will
> have entered in the relevant Asset Account. Thereafter there can be no
> Income/Expenditure in the form of a capital gain or a capital loss till
you
> have disposed of the asset. It is only at that point that its real value
is
> crystallised. What you are seeking to do is to reflect a changing value
> estimated by yourself or someone else, which can at best be an educated
> guess but which cannot be considered as enhancing your Net Worth.
>
> If however, you wish to enhance the value of the asset in your books I
would
> suggest you open a Liability Account called (say) Property Reserve. Then
> post an entry to the Asset Account leaving the Payee section blank.
Enter
> the amount by which you consider the value of the asset to have been
> enhanced in the column headed "Increase". The Category will be "Transfer"
> and the contra will be "Property Reserve Account". The Memo can be
something
> like "Estimated increase in value" Press Enter and hey presto the job is
> done.
>
> Thereafter your Net Worth statement will show the property asset at its
> estimated value while the existence of the Property Reserve as a contra
will
> lead to your Actual Net worth being shown as precisely that!
>
> As time goes by you may wish to repeat this procedure from time to time
if
> the estimated value of the property increases. Then, when you dispose of
the
> asset I suggest you reverse these entries and thereby bring the balance
of
> the asset account back to the acquisition cost.
>
> Then when you receive a cheque for the net proceeds (i.e after repayment
of
> your outstanding mortgage if any), you credit it to your bank account and
> use a Split Entry. Make a Transfer to the Asset Account for an amount
> equivalent to the balance thereon. The residual amount should be
categorised
> under Investment Income : Capital Gain. Then and only then will your
actual
> Net Worth be enhanced by the amount of your realised profit.
>
> I hope this may prove to be of some help to you.
>
> Regards,
>
> AJM
>
>
> "Dale Holden" <daleholden@blueyonder.co.uk> wrote in message
> news:O8kBuD6bDHA.1272@TK2MSFTNGP12.phx.gbl...
> > Hi
> >
> > I have created several asset accounts for different properties I own.I
> have
> > also assigned which ever mortgage applies to each one. My question is
when
> > you go into each asset and update the price of the house it throws up a
> few
> > problems.
> >
> > What categories do you assign to it? Is it an income? or is it special?
> just
> > what is it I see no default categories. I have entered it as an account
> > adjustment!
> >
> > But then I find the second problem whatever you list it a sit shows up
in
> > that months income which throws your graphs and reports completely out.
> >
> > Please can anybody tell me the correct way to show this the correct
way.
> >
> > --
> > Cheers Dale Holden
> >
> >
>
>