gnucash-user Digest, Vol 168, Issue 46

[Adrien Monteleone]

Was the price of the array $3000 or is that what you paid for it?

If you received any kind of documentable rebates or tax credits that offset the final cash price, then you might have a case for valuing the array at the original higher amount. Otherwise, short of unrealized gains, likely in combination with a professional paid-for estimate, you can’t reflect the potential higher value added to the property until you sell it. The book value of an asset is only what was paid for it. A professional estimate doesn’t change the book value, but it does provide some reasonable documentation as to why the property should be valued higher for certain considerations, like insurance coverage, or collateral values.

> From: Manolis Karamousadakis <polemidis at gmail.com <mailto:polemidis at gmail.com>>
> Subject: Asset appreciation?
> Date: March 24, 2017 at 1:56:15 PM CDT
> To: gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org>
> 
> 
> 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!
> 
> 
> 
> 
> -- 
> Emmanouil Karamousadakis
> Certified Permaculture Designer
> AGreekulture Farmstead
> Winthrop, ME 04364