How to create an asset with a reduced value compared to my regular currency (dollars)

[Mike or Penny Novack]

On 12/7/2017 5:53 PM, David Carlson wrote:
> Adrian,
>
> While I am not an accountant, historically I have used a method similar to
> that suggested by Adrien.  However, I am intrigued by the answer provided
> by Michael Novack, as it avoids the problem of overstating potentially
> taxable income without needing to have a group of accounts to segregate
> before running your tax reports at the end of the year.
>
> Thus I am considering switching to a method modeled on his suggestion.
>
> David C
>
There are other situations which might call for the adjustment of an 
asset value (or liability amount) that should not be considered either 
income or expense. I suggest looking in accounting texts with the topic 
probably under "journal entries". Some examples:

a) Back in the 60's I went to school with the help of NDF loans. There 
might be something similar today. They had a condition on the liability 
amount. Could treat these are ordinary loans BUT every year you taught 
forgave 10% of the loan.

b) When you opened your books, one of the major asset categories was art 
work. Yes, if you sold a picture for a greater amount than its book 
value, a capital gain (or for less, a capital loss). But suppose instead 
a picture thought to be by artist A was later discovered to have been by 
artist B (with VERY different values).

I am NOT an accountant. But I think these would be handled by "journal 
entry" adjustments with equity being the other side of the transaction.

Michael