Asset appreciation?

[Maf. King]

On Friday, 24 March 2017 14:56:15 GMT Manolis Karamousadakis wrote:
> Hello, I have a -maybe stupid- question but I cannot find the answer in the
> web.
> I would appreciate if you can help me clarify this!!!
> 
> My undestanding is that when you buy an fixed asset with cash you debit
> your Asset Cash account and credit  your Fixed Asset acount.
> But how do you property account when you buy something that was way too low
> priced? For example I bought A solar array. I paid $3000. This array
> installed adds $15000 value to my property.
> Now I want take a loan from a lender, and he wants to see my Assets value
> or the Net Worth Statement. How I will represent this increase in my assets
> in double accounting, as the increase in real assets does not match the
> decrease in the purchase.
> 
> Same thing when I build some asset. Ps I buy the lumber, build a shed. The
> costs of the materials + labor are a lot less that the value of the shed as
> unit.
> 
> 
> Thank you all for your time!

Hi,

I'm not an accountant, so this may be totally off the mark.  I *think* you are 
trying to allow for what is often called "unrealised gains".  it doesn't 
matter what you think an asset is worth, it is only worth what someone will 
pay for it.

I'd suggest creating an account (probably something like 
equity:AnticipatedValueAdded), and booking your asset account increases to 
that.  If you sell the asset, I suppose you'd have to reverse the Anticipated 
account and turn it into real income (profit)

0.02
Maf.