Loan

[Alex Hill]

The way that I see it is this:

When you make the loan, you have created a liability, which needs to be 
matched somewhere (the asset). So your total loan (P) is matched with an 
asset (P).

When you make repayments, you reduce the liability, and incur an expense 
(interest) and increase an asset (escrow). Seeing as these funds most likely 
come from your income, the money is coming from equity. The asset is not 
touched.

The only reason that you would change the asset value would be if you were 
able to claim the depreciation cost of the asset (house), where you would 
open a contra-asset account to accumulate depreciation into. If you then 
re-valued the house, the asset would be set off against the contra-asset 
depreciation account, then the revaluation would take place. As it seems 
that you are talking about a domestic situation, I wont go any further into 
that process (especially seeing as it varies across countries).


So in short, when you pay your mortgage, the value of your asset is not 
changed, therefore you do not need to alter the asset account.

Regards,
Alex
----- Original Message ----- 
From: "Dennis Powless" <claven123 at gmail.com>
To: <gnucash-user at gnucash.org>
Sent: Monday, November 08, 2010 11:07 AM
Subject: Loan


> I've read the guide about loans...
>
> I have a mortgage.  I pay the P, I and escrow each month.]
>
> When I set up the mortgage I have a mortgage company account
> (liability:MortgageXYZ), escrow (assets:MortgageXYZ Escrow) and
> interest accounts (Expenses:Mortgage interest).  I determined I need
> an asset account, (Assets:MortgageXYZ Property).
>
> What do I do with the actual asset account?  I see in the guide I give
> it the total amount I paid for the house.... and how does thi play in
> the monthly payment...  Ie.  I pay 100 to interest, 10 to the mortgage
> principle and 4 to the escrow... for a total payment of 114.00 from
> the checking account.  How does the actual asset get affected?
>
>
> Or, is this not make sense?
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