Asset account question:

My newest question is how to deal with asset accounts. I added my car, and 
added the initial value (price tag). This month, I went to adjust the value 
by looking up my vehicle in the Blue Book. Once I entered the newest value, 
my car devaluing by $4k shows up in ALL of my spending charts. Obviously 
this wasn't an "expenditure," and it happened gradually since I bought the 
car - not all this month! 

0
drokkon (21)
5/25/2008 6:23:17 AM
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You lost $4k of net worth. The transaction that did it was entered this 
month. That's about all Money knows. What else can it say?

"drokkon" <drokkon@live.com> wrote in message 
news:2A11B522-A1CE-4D50-9438-36595ABABEF8@microsoft.com...
> My newest question is how to deal with asset accounts. I added my car, and 
> added the initial value (price tag). This month, I went to adjust the 
> value by looking up my vehicle in the Blue Book. Once I entered the newest 
> value, my car devaluing by $4k shows up in ALL of my spending charts. 
> Obviously this wasn't an "expenditure," and it happened gradually since I 
> bought the car - not all this month! 


0
5/25/2008 12:18:25 PM
I totally understand that, and I realize it's not a mistake... I'm just 
wondering if there's some other way I'm supposed to manage asset accounts...

"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in 
message news:uJ789FmvIHA.2292@TK2MSFTNGP05.phx.gbl...
> You lost $4k of net worth. The transaction that did it was entered this 
> month. That's about all Money knows. What else can it say?
>
> "drokkon" <drokkon@live.com> wrote in message 
> news:2A11B522-A1CE-4D50-9438-36595ABABEF8@microsoft.com...
>> My newest question is how to deal with asset accounts. I added my car, 
>> and added the initial value (price tag). This month, I went to adjust the 
>> value by looking up my vehicle in the Blue Book. Once I entered the 
>> newest value, my car devaluing by $4k shows up in ALL of my spending 
>> charts. Obviously this wasn't an "expenditure," and it happened gradually 
>> since I bought the car - not all this month!
>
> 
0
drokkon (21)
5/25/2008 4:41:38 PM
I deal with my car's asset account by checking the value every 3-12 months, 
dividing the depreciation by the number of months, and enter smaller monthly 
amounts.

As this restates my net worth for the prior 2-11 months, it probably 
violates accounting principles, but as I don't own a business or submit 
monthly reports to an accountant or anything like that, I don't worry too 
much about that.

Other users don't even bother with asset accounts for cars:  They just 
expense the car when they buy it, as this saves the effort of 10 years of 
depreciation entries that wipe out most of the original value.

-- 
Scott Tyler
agent_scotty-at-hotmail-dot-com

"drokkon" <drokkon@live.com> wrote in message 
news:%23PiS4YovIHA.3792@TK2MSFTNGP02.phx.gbl...
>I totally understand that, and I realize it's not a mistake... I'm just 
>wondering if there's some other way I'm supposed to manage asset 
>accounts...
>
> "Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in 
> message news:uJ789FmvIHA.2292@TK2MSFTNGP05.phx.gbl...
>> You lost $4k of net worth. The transaction that did it was entered this 
>> month. That's about all Money knows. What else can it say?
>>
>> "drokkon" <drokkon@live.com> wrote in message 
>> news:2A11B522-A1CE-4D50-9438-36595ABABEF8@microsoft.com...
>>> My newest question is how to deal with asset accounts. I added my car, 
>>> and added the initial value (price tag). This month, I went to adjust 
>>> the value by looking up my vehicle in the Blue Book. Once I entered the 
>>> newest value, my car devaluing by $4k shows up in ALL of my spending 
>>> charts. Obviously this wasn't an "expenditure," and it happened 
>>> gradually since I bought the car - not all this month!
>>
>> 

0
Scott
5/25/2008 9:05:39 PM
Whatever works for you is fine. Many of us do not even track the cars as 
assets since they depreciate more or less to zero. Seems like more trouble 
than it's worth. YMMV. Oh, and if you have a 1955 Mercedes-Benz 300SL 
"Gullwing" by all means have an asset account for it.

This is one of many where there is no One Right Answer.

"drokkon" <drokkon@live.com> wrote in message 
news:%23PiS4YovIHA.3792@TK2MSFTNGP02.phx.gbl...
> I totally understand that, and I realize it's not a mistake... I'm just 
> wondering if there's some other way I'm supposed to manage asset 
> accounts... 


0
5/25/2008 11:27:41 PM
Thanks guys.

So taking a simple car purchase, you wouldn't recommend an asset account. 
Fine by me (my net worth is disastrous anyway), but then should I only deal 
with the loan account and transferring funds to it from my checking (eg - 
monthly payments)? What exactly do you mean by "expense the car when you buy 
it?"

"Scott Tyler" <agent_scotty-at-hotmail-dot-com> wrote in message 
news:A556E22B-7F9F-462C-B57F-BE11EA55BE97@microsoft.com...
> I deal with my car's asset account by checking the value every 3-12 
> months, dividing the depreciation by the number of months, and enter 
> smaller monthly amounts.
>
> As this restates my net worth for the prior 2-11 months, it probably 
> violates accounting principles, but as I don't own a business or submit 
> monthly reports to an accountant or anything like that, I don't worry too 
> much about that.
>
> Other users don't even bother with asset accounts for cars:  They just 
> expense the car when they buy it, as this saves the effort of 10 years of 
> depreciation entries that wipe out most of the original value.
>
> -- 
> Scott Tyler
> agent_scotty-at-hotmail-dot-com
>
> "drokkon" <drokkon@live.com> wrote in message 
> news:%23PiS4YovIHA.3792@TK2MSFTNGP02.phx.gbl...
>>I totally understand that, and I realize it's not a mistake... I'm just 
>>wondering if there's some other way I'm supposed to manage asset 
>>accounts...
>>
>> "Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in 
>> message news:uJ789FmvIHA.2292@TK2MSFTNGP05.phx.gbl...
>>> You lost $4k of net worth. The transaction that did it was entered this 
>>> month. That's about all Money knows. What else can it say?
>>>
>>> "drokkon" <drokkon@live.com> wrote in message 
>>> news:2A11B522-A1CE-4D50-9438-36595ABABEF8@microsoft.com...
>>>> My newest question is how to deal with asset accounts. I added my car, 
>>>> and added the initial value (price tag). This month, I went to adjust 
>>>> the value by looking up my vehicle in the Blue Book. Once I entered the 
>>>> newest value, my car devaluing by $4k shows up in ALL of my spending 
>>>> charts. Obviously this wasn't an "expenditure," and it happened 
>>>> gradually since I bought the car - not all this month!
>>>
>>>
> 
0
drokkon (21)
5/26/2008 4:50:47 AM
Here's one approach via example.

Say you purchase the car for $20,000 with an $15,000 loan and an additional 
$1,500 in taxes, $200 in fees, and a $2,000 trade-in and $4,700 cash down.

Split a $4,700 transaction, in the account you write the check for the down 
payment out of, into parts more or less like this:

$20,000 Automobile : Payment, memo: buy the '08 MasterCar Blaster
($2,000) Automobile : Payment, memo: trade-in the '97 MegaMotors Beater
$1,500 Taxes : Sales
($15,000) Other Income : Loan Proceeds Received, memo: this is from the Loan 
Account "08 Blaster Auto Loan" but Money doesn't provide an easy way to 
transfer those proceeds into this transaction
$200 Miscellaneous : Service Charges & Fees

Then you setup the loan account. I'd skip letting it create an Asset 
Account, but there is no One Right Answer.

So, the net Automobile : Payment is all in this one transaction. When you 
payoff the loan, you transfer principal. This reduces liability but reduces 
cash as well. Net worth change: $0. The loan payments also include the 
interest expense portion.

"drokkon" <drokkon@live.com> wrote in message 
news:B0C7DD39-3D27-4903-8A50-81D6607F5B10@microsoft.com...
> So taking a simple car purchase, you wouldn't recommend an asset account. 
> Fine by me (my net worth is disastrous anyway), but then should I only 
> deal with the loan account and transferring funds to it from my checking 
> (eg - monthly payments)? What exactly do you mean by "expense the car when 
> you buy it?"


0
5/26/2008 11:49:16 AM
"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in 
message news:%23aKdTayvIHA.4492@TK2MSFTNGP02.phx.gbl...
> Here's one approach via example.
>
> Then you setup the loan account. I'd skip letting it create an Asset 
> Account, but there is no One Right Answer.

If you don't skip setting up the asset account, then the Asset Value (on the 
day of the sale) is the value of the car that you agreed to pay for it. 
Then remember to immediately, on the same date, take a depreciation expense 
that is appropriate.  This is the expense you will incur.  As some would say 
"... a new car loses x% of value the moment you drive it off the lot...".

Then at regular intervals of your choice look uo the trade in value of the 
car and make an expense entry in your asset account for Auto: Depreciation 
to show the declining value of your automobile.

In rare cases, such as if you happen to buy a rare car, and keep it long 
enough; or you buy for example an economy car that in the face of rising 
gasoline prices has a higher trade in value then you would make the entry as 
a credit.

It's a little more work but this will show the effect of buying the car on 
your net worth.

Likewise if you buy a used car there is an agreed purchase price and most 
likely of you got a good deal you won't incur the large depreciation expense 
when you pick up your vehicle.

> So, the net Automobile : Payment is all in this one transaction. When you 
> payoff the loan, you transfer principal. This reduces liability but 
> reduces cash as well. Net worth change: $0. The loan payments also include 
> the interest expense portion.
>

If you go this route (no asset account) when the car is paid off you can 
then create an asset account and value the car at the current book value. 
In some states this might be useful for determining your personal property 
taxes or licensing fees for certain vehicles.


Mark

> "drokkon" <drokkon@live.com> wrote in message 
> news:B0C7DD39-3D27-4903-8A50-81D6607F5B10@microsoft.com...
>> So taking a simple car purchase, you wouldn't recommend an asset account. 
>> Fine by me (my net worth is disastrous anyway), but then should I only 
>> deal with the loan account and transferring funds to it from my checking 
>> (eg - monthly payments)? What exactly do you mean by "expense the car 
>> when you buy it?"
>
> 


0
5/29/2008 1:01:41 AM
Dick,

      Thanks for posting this suggestion.  I was searching the threads for 
just such a solution.

"Dick Watson" wrote:

> Here's one approach via example.
> 
> Say you purchase the car for $20,000 with an $15,000 loan and an additional 
> $1,500 in taxes, $200 in fees, and a $2,000 trade-in and $4,700 cash down.
> 
> Split a $4,700 transaction, in the account you write the check for the down 
> payment out of, into parts more or less like this:
> 
> $20,000 Automobile : Payment, memo: buy the '08 MasterCar Blaster
> ($2,000) Automobile : Payment, memo: trade-in the '97 MegaMotors Beater
> $1,500 Taxes : Sales
> ($15,000) Other Income : Loan Proceeds Received, memo: this is from the Loan 
> Account "08 Blaster Auto Loan" but Money doesn't provide an easy way to 
> transfer those proceeds into this transaction
> $200 Miscellaneous : Service Charges & Fees
> 
> Then you setup the loan account. I'd skip letting it create an Asset 
> Account, but there is no One Right Answer.
> 
> So, the net Automobile : Payment is all in this one transaction. When you 
> payoff the loan, you transfer principal. This reduces liability but reduces 
> cash as well. Net worth change: $0. The loan payments also include the 
> interest expense portion.
> 
> "drokkon" <drokkon@live.com> wrote in message 
> news:B0C7DD39-3D27-4903-8A50-81D6607F5B10@microsoft.com...
> > So taking a simple car purchase, you wouldn't recommend an asset account. 
> > Fine by me (my net worth is disastrous anyway), but then should I only 
> > deal with the loan account and transferring funds to it from my checking 
> > (eg - monthly payments)? What exactly do you mean by "expense the car when 
> > you buy it?"
> 
> 
> 
0
6/10/2008 1:01:04 PM
Glad I could help. Thanks for the feedback.

"atlanta678" <atlanta678@discussions.microsoft.com> wrote in message 
news:DC3ACDBC-7E8D-427C-AA66-B15F9AA681EF@microsoft.com...
>      Thanks for posting this suggestion.  I was searching the threads for
> just such a solution. 

0
6/11/2008 4:37:32 AM
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