Creating a dummy account in assets to track housing loan..is it the right way?

[prl]

On 17/12/2016 20:59, DaveC49 wrote:
> Hi Vinod,
>
> The normal way of recording a loan is with a Liability account as you have
> an obligation to pay the money back to the bank, i.e. when the loan for xxxx
> is issued
>
> Asset:Bank                 Db  xxxx
> Liability:Home Loan                         Cr xxxx
>
>
> payments yyy on the loan would be recorded as
>
> Liability:HomeLoan      Db yyy
> Asset:Bank                                      Cr yyy
>
> You will also have to record the interest charges www by your lender
>
> Expense:Loan Interest  Db www
> Liability:HomeLoan                          Cr www
>
> The balance of the Liability:HomeLoan account tells you how much is owing to
> the bank.
>
> To track your spending for construction you would use an Expense account
> i.e. to pay zzz for something
>
> Expense:Construction    Db zzz
> Asset:Bank                                         Cr zzz
>
> The balance of the Expense:Construction account  gives you the costs. If you
> need a more detailed breakdown on what was spent on various aspects of
> construction, use sub accounts of the Expense:Construction e.g Carpentry,
> Plumbing Electrical etc and record the appropriate costs against the
> appropriate sub account.  Each of the above is a single transaction which
> affects two (or more) accounts in each case. The two components of each
> transaction are referred to as splits in Gnucash. If this is still not clear
> look up Double Entry bookkeeping in Wikipedia.
>
> Hope that helps
>
> David Cousens
I think that what Vinod was asking about is how to track the residual 
value of a home loan sum that has been paid into his savings account 
ahead of construction. He wants to track the use of that "pot" of money 
separately from his general transactions in the savings account (for 
example, to make sure that the construction loan money isn't 
inadvertently being spent on groceries). I.e. he wants to track that 
loan amount as a separate sub-asset within the bank account asset.

I'd probably use a sub-account like "Asset:Bank:Home loan" and put the 
loan amount in it and pay construction-related expenses from it. I've 
never run a sub-account inside a "real" account (I have lots of 
sub-accounts inside placeholder accounts), but I think that it would "do 
the right thing" and the only thing you'd need to watch out for would be 
to tick "Include sub-accounts" when reconciling against a bank 
statement, which doesn't know that the single bank account is being 
managed as two personal accounts.

I've never done this, so it may not work as I imagine it would. When 
I've had a home construction loan, the bank has only ever paid against 
the builder's progress payment invoices, and the loan money was never in 
my savings account for more than a few tens of minutes. Perhaps it would 
be done differently if you're an owner-builder.

Peter