[GNC] Asset accounts: cost, or value?

[Marcus Winston]

Well, yes, it isn't necessarily a gnucash question. But pen and ink are 
a bit cumbersome, and so I use gnucash.

Let me illustrate, perhaps it will help to identify whether I'm 
fundamentally doing it wrong, or just have the wrong accounts.

In the assets:fixed assets:house account, I have (I'm making up numbers 
to make things simple):

purchase price of house: +$100,000, balance $100,000

costs to purchase: +$1000, balance $101,000

costs to sell: +$2000, balance $102,000

capital gains: $20,000, balance $122,000


What I'm attempting to do is see the cost or value of the house (or, 
that's what I thought it would do) in the assets:fixed assets:house 
account.  The purchase price is, of course, fine. The costs to purchase 
add to the basis, which is what I want to do in order to easily 
see/calculate (eventually) capital gains (for tax-related purposes). I 
add the selling costs before capital gains because, when I add the 
capital gains, then I get to the actual selling price of the house, 
which is convenient. It might be wrong from an accounting perspective, 
but I'm just a "regular person", not an accountant. I'm trying to figure 
out how to use GnuCash to track all this stuff.  What I see in the other 
accounts tells me I am probably doing it wrong. The "costs to purchase" 
account is an expense. But that account has a -$1000 balance, and the 
"costs to sell" account (also under Expenses) has a -$2000 balance. The 
capital gains is the only thing that's right, because that's an income 
account.

The fundamental question is, should I be trying to use the assets:fixed 
assets:house account to track this stuff? What I see in there has me 
thinking that account tracks my actual costs, but when I add the capital 
gains, it appears to reflect the value of the house, not the cost. 
Hence, my original question: is the "house" account intended to track 
the value, or the cost, of the house?

MW


On 9/2/20 6:53 AM, Michael or Penny Novack wrote:
> On 9/2/2020 8:28 AM, Marcus Winston wrote:
>> OK, Thanks. So the "balance" in the asset account would reflect the 
>> cost of the asset, not its value. That's fine, and is what I 
>> concluded also.
>>
>> Next question: When I sell the house, I'm adding the costs to sell 
>> the house (title insurance, reconveyance fees, etc) to the cost of 
>> the house itself. In other words, this will increase the bottom line 
>> on the fixed asset "House" account. For two-column accounting, where 
>> does that money come from (what's the other account)? I tried using 
>> an equity account, but then I end up with a positive equity value on 
>> the house after I sell it, and that doesn't make sense (I think I 
>> should have zero equity in the house once it's sold).
>>
>> MW
>
> This isn't a gnucash question per se (you would have exactly the same 
> question were we back in the days of pen and ink on paper accounting)
>
> When these transactions occurred you may have entered them wrongly << 
> BTW, maybe it is being in different jurisdictions, but you are listing 
> things like "title insurance" and "conveyance fees" as SELLER costs. 
> In my experience, it is the buyer who pays for those particular 
> things. >>
>
> But back to the other side of those transactions. What I suspect is 
> that you entered them incorrectly with the other side as expenses, not 
> changes to the basis.
>
> Michael D Novack
>
>
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