Re: [GNC] Asset accounts: cost, or value?
On 9/2/2020 11:08 AM, D. wrote: Michael, Could you go into more detail about how one would enter, e.g., title insurance in GnuCash so that it would apply to the cost basis of a property? TIA, David Take a simple example. You write a check to pay something that is properly part of the basis: debit "basis" credit "current account" I was assuming that the only way could have been puzzled if instead had done this: debit "some expense account credit "current account" And then seen no way to get the "basis" involved. Well that transaction was NOT properly an expense but the "purchase" of asset (a transfer between asset account) Michael D Novack PS: Yes I know, at "settlement" when buying a house usually some complex transaction with lots of debits and credits ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Asset accounts: cost, or value?
I can illustrate an example where costs etc are derived from my book. When I purchase a house at $100,000, using a $20,000 deposit and $83,000 mortgage. Purchase costs are $3,000 - includes insurance, buyer's agent fees etc. The Balance line describes Asset:Settlement Running Balance. Deposit Asset:Settlement +20,000 Asset:Bank -20,000 Balance 20,000 Mortgage drawn Asset:Settlement +83,000 Liability:Mortgage -83,000 Balance 103,000 House Purchase Asset:Settlement -100,000 Asset:Fixed:House +100,000 Balance 3,000 Purchase Costs Asset:Settlement -3,000 Expense:Stamp Duty 1,000 Expense:Buyer's Agent 1,000 Expense:Title Insurance 500 Expense:Building Insurance 500 Balance = 0 I chose to input each component as a separate transaction because they had different dates (e.g. deposit sent before exchange of contracts). Alternatively they could all be written as a multi-split transaction. Selling will be a similar setup. On Wed, 2 Sep 2020 at 15:16, Marcus Winston wrote: > Well, yes, it isn't necessarily a gnucash question. But pen and ink are > a bit cumbersome, and so I use gnucash. > > Let me illustrate, perhaps it will help to identify whether I'm > fundamentally doing it wrong, or just have the wrong accounts. > > In the assets:fixed assets:house account, I have (I'm making up numbers > to make things simple): > > purchase price of house: +$100,000, balance $100,000 > > costs to purchase: +$1000, balance $101,000 > > costs to sell: +$2000, balance $102,000 > > capital gains: $20,000, balance $122,000 > > > What I'm attempting to do is see the cost or value of the house (or, > that's what I thought it would do) in the assets:fixed assets:house > account. The purchase price is, of course, fine. The costs to purchase > add to the basis, which is what I want to do in order to easily > see/calculate (eventually) capital gains (for tax-related purposes). I > add the selling costs before capital gains because, when I add the > capital gains, then I get to the actual selling price of the house, > which is convenient. It might be wrong from an accounting perspective, > but I'm just a "regular person", not an accountant. I'm trying to figure > out how to use GnuCash to track all this stuff. What I see in the other > accounts tells me I am probably doing it wrong. The "costs to purchase" > account is an expense. But that account has a -$1000 balance, and the > "costs to sell" account (also under Expenses) has a -$2000 balance. The > capital gains is the only thing that's right, because that's an income > account. > > The fundamental question is, should I be trying to use the assets:fixed > assets:house account to track this stuff? What I see in there has me > thinking that account tracks my actual costs, but when I add the capital > gains, it appears to reflect the value of the house, not the cost. > Hence, my original question: is the "house" account intended to track > the value, or the cost, of the house? > > MW > > > On 9/2/20 6:53 AM, Michael or Penny Novack wrote: > > On 9/2/2020 8:28 AM, Marcus Winston wrote: > >> OK, Thanks. So the "balance" in the asset account would reflect the > >> cost of the asset, not its value. That's fine, and is what I > >> concluded also. > >> > >> Next question: When I sell the house, I'm adding the costs to sell > >> the house (title insurance, reconveyance fees, etc) to the cost of > >> the house itself. In other words, this will increase the bottom line > >> on the fixed asset "House" account. For two-column accounting, where > >> does that money come from (what's the other account)? I tried using > >> an equity account, but then I end up with a positive equity value on > >> the house after I sell it, and that doesn't make sense (I think I > >> should have zero equity in the house once it's sold). > >> > >> MW > > > > This isn't a gnucash question per se (you would have exactly the same > > question were we back in the days of pen and ink on paper accounting) > > > > When these transactions occurred you may have entered them wrongly << > > BTW, maybe it is being in different jurisdictions, but you are listing > > things like "title insurance" and "conveyance fees" as SELLER costs. > > In my experience, it is the buyer who pays for those particular > > things. >> > > > > But back to the other side of those transactions. What I suspect is > > that you entered them incorrectly with the other side as expenses, not > > changes to the basis. > > > > Michael D Novack > > > > > > ___ > > gnucash-user mailing list > > gnucash-user@gnucash.org > > To update your subscription preferences or to unsubscribe: > > https://lists.gnucash.org/mailman/listinfo/gnucash-user > > If you are using Nabble or Gmane, please see > > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > > - > > Please remember to CC this list on all your replies. > > You can do this by using Reply-To-List or Reply-All. >
Re: [GNC] Asset accounts: cost, or value?
Well, yes, it isn't necessarily a gnucash question. But pen and ink are a bit cumbersome, and so I use gnucash. Let me illustrate, perhaps it will help to identify whether I'm fundamentally doing it wrong, or just have the wrong accounts. In the assets:fixed assets:house account, I have (I'm making up numbers to make things simple): purchase price of house: +$100,000, balance $100,000 costs to purchase: +$1000, balance $101,000 costs to sell: +$2000, balance $102,000 capital gains: $20,000, balance $122,000 What I'm attempting to do is see the cost or value of the house (or, that's what I thought it would do) in the assets:fixed assets:house account. The purchase price is, of course, fine. The costs to purchase add to the basis, which is what I want to do in order to easily see/calculate (eventually) capital gains (for tax-related purposes). I add the selling costs before capital gains because, when I add the capital gains, then I get to the actual selling price of the house, which is convenient. It might be wrong from an accounting perspective, but I'm just a "regular person", not an accountant. I'm trying to figure out how to use GnuCash to track all this stuff. What I see in the other accounts tells me I am probably doing it wrong. The "costs to purchase" account is an expense. But that account has a -$1000 balance, and the "costs to sell" account (also under Expenses) has a -$2000 balance. The capital gains is the only thing that's right, because that's an income account. The fundamental question is, should I be trying to use the assets:fixed assets:house account to track this stuff? What I see in there has me thinking that account tracks my actual costs, but when I add the capital gains, it appears to reflect the value of the house, not the cost. Hence, my original question: is the "house" account intended to track the value, or the cost, of the house? MW On 9/2/20 6:53 AM, Michael or Penny Novack wrote: On 9/2/2020 8:28 AM, Marcus Winston wrote: OK, Thanks. So the "balance" in the asset account would reflect the cost of the asset, not its value. That's fine, and is what I concluded also. Next question: When I sell the house, I'm adding the costs to sell the house (title insurance, reconveyance fees, etc) to the cost of the house itself. In other words, this will increase the bottom line on the fixed asset "House" account. For two-column accounting, where does that money come from (what's the other account)? I tried using an equity account, but then I end up with a positive equity value on the house after I sell it, and that doesn't make sense (I think I should have zero equity in the house once it's sold). MW This isn't a gnucash question per se (you would have exactly the same question were we back in the days of pen and ink on paper accounting) When these transactions occurred you may have entered them wrongly << BTW, maybe it is being in different jurisdictions, but you are listing things like "title insurance" and "conveyance fees" as SELLER costs. In my experience, it is the buyer who pays for those particular things. >> But back to the other side of those transactions. What I suspect is that you entered them incorrectly with the other side as expenses, not changes to the basis. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Asset accounts: cost, or value?
Michael, Could you go into more detail about how one would enter, e.g., title insurance in GnuCash so that it would apply to the cost basis of a property? TIA, David Original Message From: Michael or Penny Novack Sent: Wed Sep 02 09:53:54 EDT 2020 To: gnucash-user@gnucash.org Subject: Re: [GNC] Asset accounts: cost, or value? On 9/2/2020 8:28 AM, Marcus Winston wrote: > OK, Thanks. So the "balance" in the asset account would reflect the > cost of the asset, not its value. That's fine, and is what I concluded > also. > > Next question: When I sell the house, I'm adding the costs to sell the > house (title insurance, reconveyance fees, etc) to the cost of the > house itself. In other words, this will increase the bottom line on > the fixed asset "House" account. For two-column accounting, where does > that money come from (what's the other account)? I tried using an > equity account, but then I end up with a positive equity value on the > house after I sell it, and that doesn't make sense (I think I should > have zero equity in the house once it's sold). > > MW This isn't a gnucash question per se (you would have exactly the same question were we back in the days of pen and ink on paper accounting) When these transactions occurred you may have entered them wrongly << BTW, maybe it is being in different jurisdictions, but you are listing things like "title insurance" and "conveyance fees" as SELLER costs. In my experience, it is the buyer who pays for those particular things. >> But back to the other side of those transactions. What I suspect is that you entered them incorrectly with the other side as expenses, not changes to the basis. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Asset accounts: cost, or value?
On 9/2/2020 8:28 AM, Marcus Winston wrote: OK, Thanks. So the "balance" in the asset account would reflect the cost of the asset, not its value. That's fine, and is what I concluded also. Next question: When I sell the house, I'm adding the costs to sell the house (title insurance, reconveyance fees, etc) to the cost of the house itself. In other words, this will increase the bottom line on the fixed asset "House" account. For two-column accounting, where does that money come from (what's the other account)? I tried using an equity account, but then I end up with a positive equity value on the house after I sell it, and that doesn't make sense (I think I should have zero equity in the house once it's sold). MW This isn't a gnucash question per se (you would have exactly the same question were we back in the days of pen and ink on paper accounting) When these transactions occurred you may have entered them wrongly << BTW, maybe it is being in different jurisdictions, but you are listing things like "title insurance" and "conveyance fees" as SELLER costs. In my experience, it is the buyer who pays for those particular things. >> But back to the other side of those transactions. What I suspect is that you entered them incorrectly with the other side as expenses, not changes to the basis. Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Asset accounts: cost, or value?
In my neck of the woods, sale prices of houses are recorded with the records of change of ownership. Sale values may not be available until some time after the sale, but they will appear. Online real estate sites can tell you the history of sales and sale prices in whatever area you are interested in. You can therefore get a reasonable idea of what is happening to values in your area. If the purpose of your personal accounts is to inform you – not some external authority – of your equity standing, is it better to stick to the purchase price of an asset you may have had for a decade or more, or to include an estimate of the sale value of the property? In any case, external authorities are likely to want an estimate of current market value. Any corporation that does NOT provide estimates of appreciation or depreciation of capital resources is not reporting accurately, as far as I can tell. -- Peter West p...@pbw.id.au “Ha! What have you to do with us, Jesus of Nazareth? Have you come to destroy us? I know who you are—the Holy One of God.” > On 2 Sep 2020, at 10:28 pm, Marcus Winston > wrote: > > OK, Thanks. So the "balance" in the asset account would reflect the cost of > the asset, not its value. That's fine, and is what I concluded also. > > Next question: When I sell the house, I'm adding the costs to sell the house > (title insurance, reconveyance fees, etc) to the cost of the house itself. In > other words, this will increase the bottom line on the fixed asset "House" > account. For two-column accounting, where does that money come from (what's > the other account)? I tried using an equity account, but then I end up with a > positive equity value on the house after I sell it, and that doesn't make > sense (I think I should have zero equity in the house once it's sold). > > MW > > On 9/1/20 10:38 PM, Stan Brown wrote: >> On 2020-09-01 19:49, Marcus Winston wrote: >>> I had thought that the Assets:Fixed assets:House would reflect the value of >>> the house. But after putting the purchase price of the house, and then >>> adding the costs to purchase (recording fees, appraisal, etc), I conclude >>> that the House account actually reflects the total cost of the house, and >>> not necessarily its value. First question: is that a correct view of the >>> Assets:Fixed assets:House1 account? >> Any tracking of value that you might do would be mere speculation. Even >> an appraisal is no indication of how much your house is really worth: >> both when I moved earlier this year both houses' appraisals were about >> 20% different from the selling price. >> >> Valuing assets on a balance sheet at somebody's guess of what they're >> worth, known as "writing to market", is part of shady accounting >> practices and, if I'm not mistaken, partly responsible for the real >> estate crash of 2008-2011. Don't do it! >> >> And of course for tax purposes, as you indicated, you _have_ to work >> from actual costs, not from guesses about value. Keeping your books on a >> cost basis will make that less difficult when you make out your tax returns. >> > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > - > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Asset accounts: cost, or value?
OK, Thanks. So the "balance" in the asset account would reflect the cost of the asset, not its value. That's fine, and is what I concluded also. Next question: When I sell the house, I'm adding the costs to sell the house (title insurance, reconveyance fees, etc) to the cost of the house itself. In other words, this will increase the bottom line on the fixed asset "House" account. For two-column accounting, where does that money come from (what's the other account)? I tried using an equity account, but then I end up with a positive equity value on the house after I sell it, and that doesn't make sense (I think I should have zero equity in the house once it's sold). MW On 9/1/20 10:38 PM, Stan Brown wrote: On 2020-09-01 19:49, Marcus Winston wrote: I had thought that the Assets:Fixed assets:House would reflect the value of the house. But after putting the purchase price of the house, and then adding the costs to purchase (recording fees, appraisal, etc), I conclude that the House account actually reflects the total cost of the house, and not necessarily its value. First question: is that a correct view of the Assets:Fixed assets:House1 account? Any tracking of value that you might do would be mere speculation. Even an appraisal is no indication of how much your house is really worth: both when I moved earlier this year both houses' appraisals were about 20% different from the selling price. Valuing assets on a balance sheet at somebody's guess of what they're worth, known as "writing to market", is part of shady accounting practices and, if I'm not mistaken, partly responsible for the real estate crash of 2008-2011. Don't do it! And of course for tax purposes, as you indicated, you _have_ to work from actual costs, not from guesses about value. Keeping your books on a cost basis will make that less difficult when you make out your tax returns. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
