These are issues that bookkeepers for a business need to deal with frequently. You are mostly on the right track. Basically, the value of an asset is the amount you could get for it if you sold it. Initially it is the price that you paid for it. If you need to periodically revalue your asset (eg for tax purposes) then you would subtract money from an Income:Appreciation account and add it to the asset account if the value of the asset increased or subtract money from the asset account and add it to an Expenses:Depreciation account if the value of the asset decreased. This is independent of any money that you might have spent on the asset (remember, it is the selling price that counts). Those are sundry expenses.
Fortunately, for most private individuals, you don't need to keep track of the value of your asset while you own it. You only account for it when you sell or dispose of the asset. For example, suppose you buy a car for $10,000. This would be recorded in the usual way: <date> <seller> Bank:Bank Account -$10,000 Asset:Motor Car $10,000 During the time that you own the car, you would record expenses such as fuel/oil/maintenance/rego in the usual way. When it comes time to sell the car, if you sold it for (say) $5,000 then you could account for the depreciation in the following way: <date> <buyer> Bank:Bank Account $5,000 Income:Asset Sales -$5,000 Asset:Motor Car -$10,000 Expenses:Asset Disposal $10,000 Alternatively, since you don't need to report the income you get from asset sales, you could record this as two separate transactions: <date><depreciation expenses> Asset:Motor Car -$5,000 Expenses:Depreciation $5,000 <date> <buyer> Bank:Bank Account $5,000 Asset:Motor Car -$5,000 On Tuesday, March 30, 2021 at 11:21:26 PM UTC+8 fanc...@gmail.com wrote: > Good afternoon, > > I (think I) do understand the textbook definition of the above, but I find > myself in doubt in many cases around how I would model a certain > transaction. > > On the face of it, it is very simple: if I spend $100 painting my room, > that's clearly an expense. Buying a car is clearly turning one asset > (cash/bank balance) into another one (the car itself). > > But then, fitting new wheels to the car is an expense, but then it is also > making the car worth more, so at the same time there's an appreciation > involved. (Or is the set of wheels another asset, that happens to be fitted > to the car "temporarily"). > > Also, let's think buying furniture: it's an asset, as I either use it > long-term or perhaps sell it, when I move, and need different ones for the > new house. But it can be also seen as an expense relating to me living in > my current accommodation. (Similar to utilities.) > > First I thought, the deciding factor might be, whether I can (or whether I > expect) the thing to be re-sold. But as the above examples show, it's not > always as clear cut in advance. I might sell it, I might keep on using it, > or might sell it as part of another asset (the flat or the car). > > So, I'd be really curious, how others see this, and how they keep their > books manageable. > > Let me know your thoughts. > > Regards, > Daniel > -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to ledger-cli+unsubscr...@googlegroups.com. To view this discussion on the web visit https://groups.google.com/d/msgid/ledger-cli/9a83c24f-5909-42fb-8307-e9b40c3ea4bbn%40googlegroups.com.
