Yet Another Basic Accounting Question

Dale Alspach alspach@math.okstate.edu
Thu, 20 Dec 2001 21:18:15 -0600


I do some accounting for our local Habitat for Humanity even though I am not an
accountant and the recommended procedure (from the actaul accountants at
HfHI) is to carry everything
that is part of the
housebuilding process: materials, licensed plumbers, electricians, etc.,
in an asset account (Construction in Progress is what we call the account.)
Basically we are moving from one asset to another (cash in the bank to the
house) This construction cost
plus the land and infrastructure (sewer, water) becomes the cost of the
house.

This is of course not the same as the market value of the completed
house. When you move in or try to sell it
the asset will have its market value, which may be
above or below what it cost you to build it. (a capital gain or loss,
realized upon sale).

Dale Alspach