Here is a general answer that will do for any capital asset. Please note that my answer is based on Canadian GAAP (Generally Accepted Accounting Principles), so the rules in your country may vary. Also, tax laws in each country are different. Here is a
<a href="http://www.gnucash.org/docs/v1.8/C/gnucash-guide/chapter11.html">link</a> to the concept guide that goes into more detail.<br><br>On 9/13/05, <b class="gmail_sendername"><a href="mailto:marc@osmium.mv.net">marc@osmium.mv.net
</a></b> <<a href="mailto:marc@osmium.mv.net">marc@osmium.mv.net</a>> wrote:<div><span class="gmail_quote"></span><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">
Hello -<br><br>I own a car, which when I purchased it, I transferred the monies used to<br>pay for it from my checking account to an asset account "car". Several<br>years have past, and now it is time to sell the car. The amount I will
<br>receive for the car will be significantly less than what I paid. My<br>questions are:<br><br>1) Should I have been tracking depreciation on some regular basis over<br> the past years, to properly reflect its current value in net-worth
<br> statements? If so, how is that done?</blockquote><div><br><br>For an individual, I wouldn't normally track depreciation. For a business, set up two accounts. The first is a sub account of the asset account (call it accumulated depreciation), the second an expense account (call it depreciation expense). Each year, make an entry to credit the accumulated depreciation account and debit the depreciation expense account. For tax purposes, the rate of depreciation is set by tax law. For financial statement purposes, you can pick whatever rate you want - as long as it is consistant and reasonable (for the most part, we just match for financial statements what we do for tax purposes).
<br><br></div><br><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">2) Now that the car will be sold, how should I account for the money that<br>
I receive (I presume it isn't income), and how do I account for the<br> difference of sold-value versus asset value on the books?</blockquote><div><br><br>Basically, you want to zero out the asset account, zero out the accumulated depreciation account, and plug the difference to an account called "Gain (Loss) on disposal of assets". The entry would look something like this:
<br><br>Assets: Bank $ x,xxx.xx<br>Assets: Accumulated depreciation $ x,xxx.xx<br>Expense: Gain (Loss) on disposal $ x,xxx.xx (or could be a credit)<br> Asset: Auto $ x,
xxx.xx<br><br>Note: disposal of assets is a completely different story for tax purposes. Please consult your tax professional for advise.<br></div><br><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">
I presume that the above questions are general, in that they are true for<br>all assets that are tracked and/or later sold (at profit or loss).</blockquote><div><br>You are correct.<br> </div><br><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">
Thanks in advance - Marc<br>_______________________________________________<br>gnucash-user mailing list<br><a href="mailto:gnucash-user@gnucash.org">gnucash-user@gnucash.org</a><br><a href="https://lists.gnucash.org/mailman/listinfo/gnucash-user">
https://lists.gnucash.org/mailman/listinfo/gnucash-user</a><br></blockquote></div><br><br clear="all"><br>-- <br>David Harrison, BAccS, CGA