Correct way to book a [auto] loan

[Dave Peticolas]

--=-gtaJpQoYTVcjFCVB6RaM
Content-Type: text/plain
Content-Transfer-Encoding: quoted-printable

On Tue, 2002-01-08 at 13:02, Nathan Cummings wrote:

<snip what seems to be a correct description of how to track a loan>

> > so at the end of the loan period, my liability (my_new_car_loan) should=
 be decreased to $0=20
> and the total accrued loan interest expense should be the $490.24. the va=
lue of the=20
> my_new_car asset should still be the original $10,000. but that doesn't f=
eel quite right=20
> as i know it is not worth $10k and gnucash will be reporting my total ass=
ets artificially=20
> inflated by the difference in its actual value and $10k. i guess that is =
where you factor=20
> in depreciation, but i think for now, that is beyond the scope of simply =
setting up the=20
> loan. however, does the rest of the argument appear to be correct? if not=
, please let me=20
> know the best way one should approach recording a moderately sized loan s=
uch as a car=20
> loan. also if anyone has any other tips about how to track loans, those w=
ould be appreciated.

I think you are on the right track for tracking your loan,
though I'm not sure the exact way to figure interest vs
principal in payments (my car loan statement breaks it
down in a way that seems random to me :)

As for the value of your car, you track that by 'depreciating'
it over time. Periodically (say once a year) you convert part
of the value to an expense with a transfer from the asset account
representing your car to a 'depreciation' expense account. You could
use, say, the Blue Book value to determine how much you need to
depreciate by.

dave


--=-gtaJpQoYTVcjFCVB6RaM
Content-Type: application/pgp-signature

-----BEGIN PGP SIGNATURE-----
Version: GnuPG v1.0.6 (GNU/Linux)
Comment: For info see http://www.gnupg.org

iD8DBQA8O3WA5effKKCmfpIRArx4AJ9o5VllgK1gl0MDwZqnLn5QXJxT+ACgukfV
GSSZo1eVk8kDsmULpQL3Puw=
=1iWT
-----END PGP SIGNATURE-----

--=-gtaJpQoYTVcjFCVB6RaM--