Owner's Draw setup under Equity group

[Mike or Penny Novack]

On 3/14/2017 2:23 AM, DaveC49 wrote:
> Ina private email Brian Hagen asked:
>
> D

> A contra account is one that is set up in conjunction with another major
> account.  The two accounts are usually sub-accounts of a header account
> which sums their balance and this is how you can typically set them up in
> Gnucash.
>
> A fairly typical example of the use of a contra account is a depreciating
> asset e.g. a car. For an asset one usually needs to record the initial
> purchase price  the depreciation on of the vehicle and the current
> depreciated value. An account structure to achieve that would be:
>
>      Asset:Car
>
>     Asset:Car: Depreciation
> The depreciation account Asset:Car:Depreciation is a sub account of
> Asset:Car and its balance sums into the balance of Asset:Car.
The more general method, where it is possible that there might be later 
increases to the basis, would be:
Asset:Car (parent, placeholder)
Asset:Car:Basis
Asset:Car:Depreciation
That makes it easier to see what the basis is at any time. Suppose that 
were a house instead of a car. While much of what you spend on a house 
would be/should be classed as expenses, some major things that change, 
improve, extend the life of that asset would be/should be considered an 
addition to the basis. For example, replacing the old windows with 
modern double pane ones, building an extension, etc.

For consistency, I treat all fixed assets subject to depreciation the 
same (even when for that particular fixed asset, a later increase to 
basis is unlikely)

Michael D Novack