[GNC] Asset accounts: cost, or value?

[Stan Brown]

On 2020-09-01 19:49, Marcus Winston wrote:
> I had thought that the Assets:Fixed assets:House would reflect the value of
> the house. But after putting the purchase price of the house, and then
> adding the costs to purchase (recording fees, appraisal, etc), I conclude
> that the House account actually reflects the total cost of the house, and
> not necessarily its value. First question: is that a correct view of the
> Assets:Fixed assets:House1 account?

Any tracking of value that you might do would be mere speculation. Even
an appraisal is no indication of how much your house is really worth:
both when I moved earlier this year both houses' appraisals were about
20% different from the selling price.

Valuing assets on a balance sheet at somebody's guess of what they're
worth, known as "writing to market", is part of shady accounting
practices and, if I'm not mistaken, partly responsible for the real
estate crash of 2008-2011. Don't do it!

And of course for tax purposes, as you indicated, you _have_ to work
from actual costs, not from guesses about value. Keeping your books on a
cost basis will make that less difficult when you make out your tax returns.

-- 
Regards,
Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
https://OakRoadSystems.com