Selling a car

[rux]

I have Quicken deluxe 2002, and I'm trying to figure out how to record
sale of a car. I have an asset account for the auto, but I don't know
how to enter a sale transaction. I could just delete the asset and
record the check in my bank register . . . is that the only way to do
it?

Rob

[Orazietti]

It depends on whether the sale will impact your taxes. If it does and you
want Quicken to account for that, you may have to create some new
categories, assign some tax items to categories, etc. etc. Get tax
instructions from last year to help.

If taxes are not a concern, you could just enter the deposit of the check as
a transfer to the asset account. That will increase your bank account and
decrease your asset account. Chances are, the sale price is not the same as
the asset value. You have to figure how to account for the difference to get
the asset to zero. That depends on how you recorded the original purchase
and how you've been adjusting the asset value.

In any case, follow a logical progression. For instance, I recorded a recent
auto purchase as an auto expense. I should record its sale using the same
category. If instead, I had recorded the purchase as a transfer to an auto
asset account, I should record the sale as a transfer to the asset account,
as I said above. Any adjustment to get the asset to zero should be entered
in the same manner as past adjustments to the asset value.

I wouldn't delete the asset account. If you do, you lose the history you've
spent time creating.

Tony

"Robert Bruce" <nospam@nospam.org> wrote in message
news:14e2n05lfopnaaemg41nntamar1s6mpl4t@4ax.com...I have Quicken deluxe 2002, and I'm trying to figure out how to record sale of a car. I have an asset account for the auto, but I don't know how to enter a sale transaction. I could just delete the asset and record the check in my bank register . . . is that the only way to do it? Rob

[MJ]

Purchasing an Auto should NOT be recorded as an expense. Done properly
(assuming you paid cash which likely is not the case) you would create a NEW
asset (the car) in value equal to the cash you paid (so asset Cash reduces
and Asset Auto increases). If you borrowed the money (likely) you have a
new asset (Car) and a new liability or debt (loan).
"Orazietti" <aorazietti(nospamforme)@mindspring.com> wrote in message
news:Hoccd.5217$6k2.3607@newsread3.news.pas.earthlink.net... It depends on whether the sale will impact your taxes. If it does and you want Quicken to account for that, you may have to create some new categories, assign some tax items to categories, etc. etc. Get tax instructions from last year to help. If taxes are not a concern, you could just enter the deposit of the check as a transfer to the asset account. That will increase your bank account and decrease your asset account. Chances are, the sale price is not the same as the asset value. You have to figure how to account for the difference to get the asset to zero. That depends on how you recorded the original purchase and how you've been adjusting the asset value. In any case, follow a logical progression. For instance, I recorded a recent auto purchase as an auto expense. I should record its sale using the same category. If instead, I had recorded the purchase as a transfer to an auto asset account, I should record the sale as a transfer to the asset account, as I said above. Any adjustment to get the asset to zero should be entered in the same manner as past adjustments to the asset value. I wouldn't delete the asset account. If you do, you lose the history you've spent time creating. Tony "Robert Bruce" <nospam@nospam.org> wrote in message news:14e2n05lfopnaaemg41nntamar1s6mpl4t@4ax.com...I have Quicken deluxe 2002, and I'm trying to figure out how to record sale of a car. I have an asset account for the auto, but I don't know how to enter a sale transaction. I could just delete the asset and record the check in my bank register . . . is that the only way to do it? Rob

[Orazietti]

My autos aren't assets, they're big, fat expenses. Sure, I could track their
current value in an asset account so I can spread the initial cost over
several years and smile at how much bigger my net worth is. I have better
things to do with my time. I plan to run my current autos for two hundred
thousand miles each and then donate them to charity. There's no value in
treating them as an asset. For others, especially collectors, an asset
account would be the correct approach.

By the way, it is likely that I paid cash.

Tony

"EmJay" <oxy_u@hotmail.com> wrote in message
news:MJDcd.745314$M95.233314@pd7tw1no... Purchasing an Auto should NOT be recorded as an expense. Done properly (assuming you paid cash which likely is not the case) you would create a NEW asset (the car) in value equal to the cash you paid (so asset Cash reduces and Asset Auto increases). If you borrowed the money (likely) you have a new asset (Car) and a new liability or debt (loan). "Orazietti" <aorazietti(nospamforme)@mindspring.com> wrote in message news:Hoccd.5217$6k2.3607@newsread3.news.pas.earthlink.net... It depends on whether the sale will impact your taxes. If it does and you want Quicken to account for that, you may have to create some new categories, assign some tax items to categories, etc. etc. Get tax instructions from last year to help. If taxes are not a concern, you could just enter the deposit of the check as a transfer to the asset account. That will increase your bank account and decrease your asset account. Chances are, the sale price is not the same as the asset value. You have to figure how to account for the difference to get the asset to zero. That depends on how you recorded the original purchase and how you've been adjusting the asset value. In any case, follow a logical progression. For instance, I recorded a recent auto purchase as an auto expense. I should record its sale using the same category. If instead, I had recorded the purchase as a transfer to an auto asset account, I should record the sale as a transfer to the asset account, as I said above. Any adjustment to get the asset to zero should be entered in the same manner as past adjustments to the asset value. I wouldn't delete the asset account. If you do, you lose the history you've spent time creating. Tony "Robert Bruce" <nospam@nospam.org> wrote in message news:14e2n05lfopnaaemg41nntamar1s6mpl4t@4ax.com...I have Quicken deluxe 2002, and I'm trying to figure out how to record sale of a car. I have an asset account for the auto, but I don't know how to enter a sale transaction. I could just delete the asset and record the check in my bank register . . . is that the only way to do it? Rob

[Rick Hess]

"EmJay" <oxy_u@hotmail.com> wrote Purchasing an Auto should NOT be recorded as an expense.

I disagree. It IS an expense and should be categorized as such, whether or
not the user wants to declare it as an asset.

For an accurate net worth, an asset account should also be created to
reflect the market value of the auto. The opening balance should reflect
the market value of the auto. The market value is not necessarily the same
as the purchase price; IOW, the auto might be worth more or less than what
it was purchased for. Credits or debits can be made to the asset account to
reflect increases or decreases in market value.

If a loan is involved, a liability account should also be created to track
the loan balance.

--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Rick Hess]

"Robert Bruce" <nospam@nospam.org> wrote I have Quicken deluxe 2002, and I'm trying to figure out how to record sale of a car. I have an asset account for the auto, but I don't know how to enter a sale transaction. I could just delete the asset and record the check in my bank register . . . is that the only way to do it?

I think the answer depends on how you recorded the purchase.

As sometimes happens in NGs, you have received as many methods as
responders! Here's one more:

PURCHASING:
I use an expense category (Auto:Purchase) to record the purchase price. If
there are other associated expenses such as taxes, those expenses are
recorded in their appropriate categories using a split transaction. I
create an asset account to reflect the market value of the auto (which is
not necessarily the purchase price), as I explained earlier in this thread.
If a loan is involved, a liability account should be setup to reflect this.

SELLING:
I use an income category to record the sales price. If there are other
associated expenses such as taxes, those expenses are recorded in their
appropriate categories using a split transaction. I then debit my asset
account with an appropriate "Payee" entry (SALE) so as to zero out the
account; I do this using an internal transfer. The loan account, if any,
should be adjusted (usually as part of the split sales transaction) to show
the payoff amount. Do not delete the asset and liability accounts.


NOTES:
I can see the logic behind Tony's method of using the same category to
record both the purchase and the sale. You need to decide how you want your
reports to appear.

You can track multiple autos separately by assigning a class to each one, if
you want to report each individually.

I actually use only one asset account to track multiple autos. I do this
for simplicity and to conserve resources in Q since there is a limit to the
number of accounts, and I am approaching that limit. Most users will not be
affected by account limits.

Some users have posted in this NG that they use the asset account to track
the vehicle's basis (how much they have into it). They do this by entering
the purchase price, regardless of the actual market value of the vehicle.
Some even add their subsequent repair expenses to the account. Personally I
feel that this method creates inaccuracies in your equity and net worth
reports and I don't recommend it.

I acknowledge that the purchase price and the market value can often be the
same number, as is usually the case with a new vehicle. However, the last
time I called dealers for quotes on the same package, no two dealers gave me
the same quote, and often there were differences of thousands of dollars.
Used vehicles often have a market value of greater (hopefully) than the
purchase price. I used that principle dozens of times to help pay for
college.
--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Mike B]

EmJay <oxy_u@hotmail.com> wrote: Purchasing an Auto should NOT be recorded as an expense. Done properly (assuming you paid cash which likely is not the case) you would create a NEW asset (the car) in value equal to the cash you paid (so asset Cash reduces and Asset Auto increases). If you borrowed the money (likely) you have a new asset (Car) and a new liability or debt (loan).

Of course I can record an auto purchase as an expense. Like many others, I
don't track the value of my auto as an asset, I write it off as an expense -
which it is for me. Rather that than the never-ending tinkering with asset
values and distortion of real net worth. If I have a loan, which I only do
if my credit history is starting to look sparse, then I'll track the loan,
but I still won't record the offsetting asset of an auto. I simply don't
regard an auto (or my furniture, paintings and other "stuff") as real
assets.

--
Mike B

[Charles Howse]

>Of course I can record an auto purchase as an expense. Like many others, Idon't track the value of my auto as an asset, I write it off as an expense -which it is for me. Rather that than the never-ending tinkering with assetvalues and distortion of real net worth. If I have a loan, which I only doif my credit history is starting to look sparse, then I'll track the loan,but I still won't record the offsetting asset of an auto. I simply don'tregard an auto (or my furniture, paintings and other "stuff") as realassets.

You make some very good points

Im just curious what assets you DO track? What real
HARD assets that is?

Do you only track BIG things such as homes, etc?

What if you buy an expensive John Deere riding lawn
mower to mow lawn with?

[Dick Weaver]

me@privacy.net wrote:Of course I can record an auto purchase as an expense. Like many others, Idon't track the value of my auto as an asset, [snip]... You make some very good points Im just curious what assets you DO track? What real HARD assets that is? Do you only track BIG things such as homes, etc? What if you buy an expensive John Deere riding lawn mower to mow lawn with?

Instead of asking "what", ask "why". It's a person's purpose in
tracking assets that determines the assets to be tracked.

For some common purposes - estate tax planning, supporting family after
death of income producing spouse - expensive lawn mowers, even cars, may
have negligible value (note "may", a weasel word - there are
exceptions). Indeed, if you own a house, the uncertainty in it's value
due to normal market fluctuations may exceed the sum value of all your
"hard" (auto, lawn mower, wall sized tv, ...) assets.

dick w

[Doug Ellice]

Mike B wrote:
EmJay <oxy_u@hotmail.com> wrote:Purchasing an Auto should NOT be recorded as an expense. Doneproperly (assuming you paid cash which likely is not the case) youwould create a NEW asset (the car) in value equal to the cash youpaid (so asset Cash reduces and Asset Auto increases). If youborrowed the money (likely) you have a new asset (Car) and a newliability or debt (loan).Of course I can record an auto purchase as an expense. Like many others, Idon't track the value of my auto as an asset, I write it off as an expense -which it is for me. Rather that than the never-ending tinkering with assetvalues and distortion of real net worth. If I have a loan, which I only doif my credit history is starting to look sparse, then I'll track the loan,but I still won't record the offsetting asset of an auto. I simply don'tregard an auto (or my furniture, paintings and other "stuff") as realassets.
The CORRECT method - not that everyone cares - is to record the auto as
an asset. Then you should "depreciate" it over several years.
Depreciation is a fancy word for treating as an expense the declining
value of the car. This "spreads" the expense over the life of the car,
rather than bulking it in the year of purchase.

Distorting your expenses is not morally superior to distorting your real
net worth. And in any case recognizing the car as an asset does not
distort anything except your personal definition of net worth.

Doug

[Rick Hess]

"Doug Ellice" <ellice9434removethis@comcast.net> wrote The CORRECT method - not that everyone cares - is to record the auto as an asset. Then you should "depreciate" it over several years. Depreciation is a fancy word for treating as an expense the declining value of the car. This "spreads" the expense over the life of the car, rather than bulking it in the year of purchase.

It sounds like you're describing depreciation of basis -- not depreciation
of market value. Market value can increase or decrease, although with
autos -- especially new ones -- the market value is usually going to
decrease.

If you're suggesting depreciating the auto's basis (implied by your words
"This "spreads" the expense over the life of the car") then you're getting
into an area for which Q was not designed, and does not handle well. Q was
designed to track cash flows and equities. Tracking basis instead of market
value will produce an inaccurate net worth.

Distorting your expenses is not morally superior to distorting your real net worth. And in any case recognizing the car as an asset does not distort anything except your personal definition of net worth.

An interesting statement. Do you subscribe to it?
--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Orazietti]

No, recording an auto as an asset is not THE correct method. THE correct
method is the one that suites the situation. Many people, myself included,
purchase an auto with the intent of using it for several years. We will be
lucky to get 10% back on trade in, sale, or donation. The auto is not an
asset nor a real contributor to net worth, it is just a big expense. For us,
to think of our vehicles as having any value other than a way to get around
town is a delusion.

Depreciation is not a fancy word, it is a complicated mess. Look at IRS
publication 463.

Tony

"Doug Ellice" <ellice9434removethis@comcast.net> wrote in message
news:d8Wdnd_gre7-kOncRVn-1Q@comcast.com... Mike B wrote:EmJay <oxy_u@hotmail.com> wrote:Purchasing an Auto should NOT be recorded as an expense. Doneproperly (assuming you paid cash which likely is not the case) youwould create a NEW asset (the car) in value equal to the cash youpaid (so asset Cash reduces and Asset Auto increases). If youborrowed the money (likely) you have a new asset (Car) and a newliability or debt (loan).Of course I can record an auto purchase as an expense. Like many others, Idon't track the value of my auto as an asset, I write it off as anexpense - which it is for me. Rather that than the never-ending tinkeringwith asset values and distortion of real net worth. If I have a loan,which I only do if my credit history is starting to look sparse, then I'lltrack the loan, but I still won't record the offsetting asset of an auto.I simply don't regard an auto (or my furniture, paintings and other"stuff") as real assets. The CORRECT method - not that everyone cares - is to record the auto as an asset. Then you should "depreciate" it over several years. Depreciation is a fancy word for treating as an expense the declining value of the car. This "spreads" the expense over the life of the car, rather than bulking it in the year of purchase. Distorting your expenses is not morally superior to distorting your real net worth. And in any case recognizing the car as an asset does not distort anything except your personal definition of net worth. Doug

[Rick Hess]

"Orazietti" <aorazietti(nospamforme)@mindspring.com> wrote No, recording an auto as an asset is not THE correct method. THE correct method is the one that suites the situation.

I agree. If one is not concerned with an accurate net worth, tracking one's
assets may be more trouble than it's worth (pun intended).

Many people, myself included, purchase an auto with the intent of using it for several years. We will be lucky to get 10% back on trade in, sale, or donation. The auto is not an asset nor a real contributor to net worth, it is just a big expense. For
us, to think of our vehicles as having any value other than a way to get
around town is a delusion.

Tony, to say an auto is not an asset is simply untrue. To you it may be a
SMALL asset, or insignificant asset -- too insignificant to bother with in
Q -- but if it serves its intended purpose it IS an asset. What its value
might be in "several years" is irrelevant. The fact that it has value today
makes it an asset.

And if you don't want to take my word for it, look at a credit application.
Most have a left and a right column, the left being for assets. Guess what:
The approximate value of your auto(s) is included in the Creditor's
definition of assets and figures into your net worth.

Depreciation is not a fancy word, it is a complicated mess. Look at IRS publication 463.

Yes it is, and IMO, it has no place in Q.
--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Andrew]

Rick Hess wrote: re/Guess what: The approximate value of your auto(s) is included in the Creditor's definition of assets and figures into your net worth. Depreciation is not a fancy word, it is a complicated mess. Look at IRS publication 463. Yes it is, and IMO, it has no place in Q.

From the Q help file:
"Track the value of my belongings
You can use an asset account in conjunction with a liability account to
track your net worth more accurately. For example, if you've taken out a
loan to buy a home or car, be sure to set up both a loan to track what you
owe and an asset account to track your equity in the home or vehicle."


So they suggest one records the current value of the auto as an asset. I
keep mine in an asset account and every 6 months reduce it by the blue book
value plus a value of what I would think it would get on the open market. I
don't particularly think this takes a lot of time, and it *is* considered
part of one's estate I believe. Gawd forbid my family needs it, but I keep
all this sort of stuff in Q for their purpose if I'm not around. (I sure as
hell hope they remember the password!)
--
--
Regards -

- Andrew

[Mike B]

I didn't mean to start such a heated debate. I only took mild exception with
the posters stated position that
Purchasing an Auto should NOT be recorded as an expense.

Of course one can record an auto purchase as an asset and do regular
depreciation. OTOH, I simply record when the money leaves my account and
flows into the dealer's pocket. I don't use Quicken for estate planning or
anything other than a place to record cash flows. So I record securities as
I purchase them with cash, I record my morgage as I repay it with cash. And
to not make too large a hole in my net worth, I have an asset equal to the
original purchase price of my house. I don't update that value ever, despite
what the tax assesor tells me my home is worth.

I prefer to seldom update security prices, basically I take a checkpoint
every 3 months or so and see what needs to be done, for the rest, things go
on auto-pilot. So in Quicken there is no mention of carpets, expensive
lawnmowers (I bought mine before I started using Quicken) and other
paraphenalia. If I had to buy another lawnmower, I'd simply write it off as
Household:Pool & garden and show a huge overbudget for that month.

I don't want to know to the cent and by the minute how much I'm worth,
because I believe in the old adage that says: "A man that can tell you
exactly how much he is worth does not have much". So I pretend not to know
how much I'm worth. ;-)

I also don't track cash spending - most cash gets written off as "Misc". I
never split a credit card or other entry into multiple categories. It just
isn't that important to me, I only want to see the big picture. So I have a
set of rules.
Everything we buy at the supermarket is "groceries", everything we buy at
Target is "Household", everything I buy at Lowe's is "Pool & garden". if I'm
off by $50 at the end of the month, sue me...

And I pay a CPA to do my taxes - I don't trust myself or Quicken. I recon it
is the best investment I make annually to pay the guy. I dump a bunch of
forms and papers in an envelope, go visit my CPA for an hour and a cup of
coffee and walk out with all my tax affairs done.

--
Mike B

[Charles Howse]

>The CORRECT method - not that everyone cares - is to record the auto asan asset. Then you should "depreciate" it over several years.Depreciation is a fancy word for treating as an expense the decliningvalue of the car. This "spreads" the expense over the life of the car,rather than bulking it in the year of purchase.

I am taking a very elementary college accounting class
and this is how they are teaching us above

[Charles Howse]

>The auto is not anasset nor a real contributor to net worth, it is just a big expense. For us,to think of our vehicles as having any value other than a way to get aroundtown is a delusion.

You are sure making me "think" on this above.

I tend to agree with you ... in the real world

[Charles Howse]

>I agree. If one is not concerned with an accurate net worth, tracking one'sassets may be more trouble than it's worth (pun intended).

How come? Can u explain?

[Charles Howse]

>So they suggest one records the current value of the auto as an asset. Ikeep mine in an asset account and every 6 months reduce it by the blue bookvalue plus a value of what I would think it would get on the open market.


When you do the above..... what category do you debit
the "expense" to?

Do you have an expense category called "car
depreciation"?

[Charles Howse]

>I didn't mean to start such a heated debate. I only took mild exception withthe posters stated position that

Guys please don't worry abt it being a debate....cause
Ive found this thread VERY informative and can see both
sides a bit.

So please.... us newbies out here are learning
something from this thread

[Charles Howse]

>If I had to buy another lawnmower, I'd simply write it off asHousehold:Pool & garden and show a huge overbudget for that month.


OK

I was wondering how to handle such "big" expenses like
the above

My only problem when doing the above is that it makes
my cash flow reports "wacky" as it show me having spent
more that month then I may have made...sicn it was such
a big expense

[Charles Howse]

>I don't want to know to the cent and by the minute how much I'm worth,because I believe in the old adage that says: "A man that can tell youexactly how much he is worth does not have much". So I pretend not to knowhow much I'm worth. ;-)

Haha

That made me laugh... thanks!

[Charles Howse]

>I also don't track cash spending - most cash gets written off as "Misc". Inever split a credit card or other entry into multiple categories. It justisn't that important to me, I only want to see the big picture. So I have aset of rules.Everything we buy at the supermarket is "groceries", everything we buy atTarget is "Household", everything I buy at Lowe's is "Pool & garden". if I'moff by $50 at the end of the month, sue me...

These are two areas where I used to do like you do.....
i.e. just want to see BIG picture

However after reading the book "Your Money or Your
Life" I made more detailed categories and make sure to
split them into proper categories.

Reason being is..... the book teaches you that you MUST
know where that money is going so one can make wiser
choices.

Example..... I go to a local bar here just abt everyday
after work. Its a Cheers style bar with lots of great
people. In the past I never kept track of what i was
spending ther instead just marking it off as
"miscellaneous" expenses. But after reading book above
an making a category called "food-beers".... I was
shocked to learn how much those one or two beers a day
after work were costing me.

I still go to that bar.... but sometimes drink ice tea
or a Pepsi....or maybe go two days a week now.

Bottom line..... the book really drives home the points
abt keeping detailed records of WHERE that money is
going so one can have knowledge and power

[Rick Hess]

<me@privacy.net> wroteI agree. If one is not concerned with an accurate net worth, tracking
one'sassets may be more trouble than it's worth (pun intended). How come? Can u explain?

If you don't care about it, why track it?

I care about an accurate portfolio so I track my assets. I use one asset
account for autos, individual asset accounts for real estate, and an asset
account for other chattel.

But I have strong reasons for keeping an accurate net worth. The nature of
the businesses I run require frequent submittal of financial docs to my
creditors. Although I don't worry about my assets' values being accurate to
the penny, I try to keep them at least +/- 5% or so. It really doesn't take
much time to keep this stuff up to date once you get started.

But if you have no use for the data, why bother?

--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Rick Hess]

"Andrew" <andrew@jkl.com> wrote Rick Hess wrote: re/Guess what: The approximate value of your auto(s) is included in the Creditor's definition of assets and figures into your net worth. Depreciation is not a fancy word, it is a complicated mess. Look at IRS publication 463. Yes it is, and IMO, it has no place in Q. From the Q help file: "Track the value of my belongings You can use an asset account in conjunction with a liability account to track your net worth more accurately. For example, if you've taken out a loan to buy a home or car, be sure to set up both a loan to track what you owe and an asset account to track your equity in the home or vehicle." So they suggest one records the current value of the auto as an asset. I keep mine in an asset account and every 6 months reduce it by the blue
book value plus a value of what I would think it would get on the open market.
I don't particularly think this takes a lot of time, and it *is* considered part of one's estate I believe. Gawd forbid my family needs it, but I
keep all this sort of stuff in Q for their purpose if I'm not around. (I sure
as hell hope they remember the password!)


From your post to me it appears that you're responding to my comment
regarding depreciation. I (and I believe Tony as well) was referring to
depreciation of basis (the tax term), not depreciation of value. These are
two different animals.

My position (which I believe concurs with your Help cite) is that if one
desires Q to track an accurate net worth, then assets need to be accounted
for; and the assets' *market value* -- not basis -- should be depreciated
or appreciated as needed.

Depreciation of basis isn't normally necessary unless the asset is counted
as a business asset for tax purposes. This type of depreciation is
complicated and IMO is best handled by tax preparation software -- NOT
Quicken.
--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Carl]

Assuming assets are for personal use it seems to me that the crux of the
matter is where do you put the second entry.

For 'wasting' assets, such as my car and RV, I set them up in individual
asset (Property and Loan) accounts.

Then, periodically, I reduce their values by clicking the Update Balance
button. Step 2 of this procedure asks you to choose a category for the
balance reduction. I choose a transfer acct (Transfer to/from Honda) and
thus charge the reduction back to the asset acct.

The result is that the value of the asset and my net worth are both changed,
but income and expense are not.

I think Quicken does the same thing automatically when you update the share
value of an investment asset. The value of the investment changes and net
worth changes accordingly, but no actual income results.

We use Q to track our money and to satisfy the IRS. There is a taxable event
only when you sell an asset but if it is a car for personal use, the IRS
does not allow you to claim a loss. I am not an accountant, but this seems
to work OK for me.

Carl

[Charles Howse]

>But if you have no use for the data, why bother?

OK.... thanks so much for the advice and opinion!

[Jim Craig]

I track my net worth for my own amusement. Therefore, I set up asset
accounts for all major items - cars, computers, etc. The cost of each item
is charged to its account. I have one expense catagory called depreciation.
Then I set up a scheduled transaction for each account charging an arbitrary
2 1/2 - 3% of the cost to depreciation. The transactions are set up to
execute automatically at the end of each month, so I never deal with them.
Then every six months I refigure the amount to charge based on the balance
of the asset accounts at that time and change the scheduled transactions
accordingly. When the balance of any item becomes too small to bother with,
I charge off the remainder to depreciation which zeros the account out.

I realize that this method is only an approximation, but it avoids the
problem of distorting expenses in any one month.

Jim

<me@privacy.net> wrote in message
news:tl3an05v9uoib9s309ts3tgcnc37qhdbbd@4ax.com...The CORRECT method - not that everyone cares - is to record the auto asan asset. Then you should "depreciate" it over several years.Depreciation is a fancy word for treating as an expense the decliningvalue of the car. This "spreads" the expense over the life of the car,rather than bulking it in the year of purchase. I am taking a very elementary college accounting class and this is how they are teaching us above

[Charles Howse]

>I track my net worth for my own amusement. Therefore, I set up assetaccounts for all major items - cars, computers, etc. The cost of each itemis charged to its account. I have one expense catagory called depreciation.Then I set up a scheduled transaction for each account charging an arbitrary2 1/2 - 3% of the cost to depreciation. The transactions are set up toexecute automatically at the end of each month, so I never deal with them.Then every six months I refigure the amount to charge based on the balanceof the asset accounts at that time and change the scheduled transactionsaccordingly. When the balance of any item becomes too small to bother with,I charge off the remainder to depreciation which zeros the account out.I realize that this method is only an approximation, but it avoids theproblem of distorting expenses in any one month.Jim


I see

Well I guess this begs the question as to how you
define what an asset is then?

Do you only consider things that aren't "used up in
less than a year an asset and do the above?

I mean.... suppose I buy a $150 dollar PC printer.
Something that only retains pennies on the dollar of
value after bought? Do you treat that as an asset?

Bottom line... what "things" do you treat as assets and
what do you treat as expenses when it comes to material
possessions?

[Jim Craig]

Presently I have two auto accounts, a digital camera, a digital camcorder, a
home computer, some computer equipment used in a business, home furnishings,
and a home. The computer accounts get all hardware associated with it, like
the printer, etc. Software gets expensed at time of purchase. The home
furnishings gets any major purchases, like furniture, rugs, etc. The home
doesn't depreciate, nor do I try to keep up with any perceived increase in
value. Capital improvements get added to the account - maintenance, repairs
etc get expensed.

HTH - Jim

<me@privacy.net> wrote in message
news:5qgan0t41orvfh1dr8noe7vgf3au26tlbk@4ax.com...I track my net worth for my own amusement. Therefore, I set up assetaccounts for all major items - cars, computers, etc. The cost of each itemis charged to its account. I have one expense catagory calleddepreciation.Then I set up a scheduled transaction for each account charging anarbitrary2 1/2 - 3% of the cost to depreciation. The transactions are set up toexecute automatically at the end of each month, so I never deal with them.Then every six months I refigure the amount to charge based on the balanceof the asset accounts at that time and change the scheduled transactionsaccordingly. When the balance of any item becomes too small to botherwith,I charge off the remainder to depreciation which zeros the account out.I realize that this method is only an approximation, but it avoids theproblem of distorting expenses in any one month.Jim I see Well I guess this begs the question as to how you define what an asset is then? Do you only consider things that aren't "used up in less than a year an asset and do the above? I mean.... suppose I buy a $150 dollar PC printer. Something that only retains pennies on the dollar of value after bought? Do you treat that as an asset? Bottom line... what "things" do you treat as assets and what do you treat as expenses when it comes to material possessions?

[Doug Ellice]

me@privacy.net wrote...The auto is not anasset nor a real contributor to net worth, it is just a big expense. For us,to think of our vehicles as having any value other than a way to get aroundtown is a delusion.
You are sure making me "think" on this above. I tend to agree with you ... in the real world

Here's another reason not to expense a major purchase of an item that
will last more than one year: you distort your true expense picture.
Of course most of the value of an auto will be "consumed" by an owner
who keeps it for any length of time. And that money IS, as the person
who says he expenses the whole thing at once said, a transportation
"expense". It just isn't one enormous expense in the week it occured,
and then NO expense ever again.

Most Quicken users aren't bookkeepers or accountants. There are lots
of people here who "only use Quicken to print checks", or "only use
Quicken to track my spending". God bless them, but they shouldn't
give too much advice to others about how to do the things they don't
do.

If all someone needs is a paper record that they spent $23,000 today
on a Ford, they can use their paper checkbook register and not use
Quicken. Quicken is designed to track income and expenses, assets and
liabilities. Anybody is free to make up their own definition of the
words "asset" and "expense", but they should probably not be too quick
to share them.

Doug

[Andrew]

me@privacy.net wrote: So they suggest one records the current value of the auto as an asset. I keep mine in an asset account and every 6 months reduce it by the blue book value plus a value of what I would think it would get on the open market. When you do the above..... what category do you debit the "expense" to? Do you have an expense category called "car depreciation"?

No, for me, it's not that complicated. I do what someone else suggested in
a later post, just hit the UPDATE BALANCE and charge the entry's catagory
simply to the account name. No depreciation category. It's only so that I
have a record when generating a NET WORTH REPORT what the residual value of
the autos are.
Mostly just to get an approximate number of the net worth.

Regards -

- Andrew

[Gerald W. Wilkins]

On Tue, 19 Oct 2004 17:57:44 UTC, "Jim Craig" <jgcraig@nospam.bigfoot.com>
wrote:
Presently I have two auto accounts, a digital camera, a digital camcorder, a home computer, some computer equipment used in a business, home furnishings, and a home. The computer accounts get all hardware associated with it, like the printer, etc. Software gets expensed at time of purchase. The home furnishings gets any major purchases, like furniture, rugs, etc. The home doesn't depreciate, nor do I try to keep up with any perceived increase in value. Capital improvements get added to the account - maintenance, repairs etc get expensed. HTH - Jim <me@privacy.net> wrote in message news:5qgan0t41orvfh1dr8noe7vgf3au26tlbk@4ax.com...I track my net worth for my own amusement. Therefore, I set up assetaccounts for all major items - cars, computers, etc. The cost of each itemis charged to its account. I have one expense catagory calleddepreciation.Then I set up a scheduled transaction for each account charging anarbitrary2 1/2 - 3% of the cost to depreciation. The transactions are set up toexecute automatically at the end of each month, so I never deal with them.Then every six months I refigure the amount to charge based on the balanceof the asset accounts at that time and change the scheduled transactionsaccordingly. When the balance of any item becomes too small to botherwith,I charge off the remainder to depreciation which zeros the account out.I realize that this method is only an approximation, but it avoids theproblem of distorting expenses in any one month.Jim I see Well I guess this begs the question as to how you define what an asset is then? Do you only consider things that aren't "used up in less than a year an asset and do the above? I mean.... suppose I buy a $150 dollar PC printer. Something that only retains pennies on the dollar of value after bought? Do you treat that as an asset? Bottom line... what "things" do you treat as assets and what do you treat as expenses when it comes to material possessions?

Years ago I created a meticulous inventory of everything I owned in an
attempt to get a handle on my "net worth." This inventory was a fairly
accurate snapshot of the state of my affairs *at the moment of its
creation*.

The passage of time and my failure to regularly update the list rendered it
meaningless and perhaps misleading as the value of yesterday's toys faded
and new toys replaced them. Needless to say, I no longer enter everything
I own into an asset category. What I consider toys, someone else may
consider an asset. Generally my toys are electronic and technological
gadgets, but they support hobbies and other leisure time pursuits. As such
my new tubas over the past couple of years haven't made the list either
although I should perhaps rethink this since they are in the aggregate
worth as much as some new cars and they retain their value much better than
most other toys.

My approach to vehicles had been to include them in my 'Property Assets'
along with my home, etc. Then around the first of the year I created a
negative entry called depreciation that I deducted from each individual
vehicle asset an amount specifically assigned to that vehicle, e.g. 1999
Chevy Impala Depreciation $4000 (bogus invented example!)

In order to view the depreciated value of each vehicle in the Property
Asset category I created a report that contained transactions only for the
vehicle in question. Trading or selling a vehicle necessitated zeroing out
the balance on that report, which was very easy to do either by depositing
cash in another account or by transferring it into a new vehicle asset.

This system fell by the wayside when I began leasing my primary vehicle in
1997. I need to revive it, though, since I've again owned my primary
vehicle since 2002. I'll get around to it real soon now, I guess.

This is but one approach, and I'm sure there are others.

Jerry

[Doug Ellice]

Rick Hess wrote:
If you're suggesting depreciating the auto's basis (implied by your words"This "spreads" the expense over the life of the car") then you're gettinginto an area for which Q was not designed, and does not handle well. Q wasdesigned to track cash flows and equities. Tracking basis instead of marketvalue will produce an inaccurate net worth. It sounds like you're describing depreciation of basis -- not depreciation

Well, of course. In accounting assets are usually valued at cost (plus
any basis adjustments). And for a car, as you note, this is not an
issue, since market value is usually less than cost.

Quicken handles depreciation and appreciation just fine, I think. You
just need the appropriate accounts.

Distorting your expenses is not morally superior to distorting your realnet worth. And in any case recognizing the car as an asset does notdistort anything except your personal definition of net worth.An interesting statement. Do you subscribe to it?

Yes, though I have "the soul of an accountant" and try not to distort
anything. I understand the poster's desire to have "net worth" show him
what he really has available to spend (which of course is not what net
worth is), so he wants to skip valuing the house, and expenses the car
because he'll never sell it for cash.

But there are other ways to accomplish this kind of thing. I have a
"liquid net worth" report that is only current accounts, and does not
include property (house and car) or retirement funds. The report
includes only accounts for assets I could spend now if I chose, and
current liabilities (not the mortgage).

Doug

[Charles Howse]

>Here's another reason not to expense a major purchase of an item thatwill last more than one year: you distort your true expense picture.Of course most of the value of an auto will be "consumed" by an ownerwho keeps it for any length of time. And that money IS, as the personwho says he expenses the whole thing at once said, a transportation"expense". It just isn't one enormous expense in the week it occured,and then NO expense ever again.

Agreed

And this is EXACTKY what they are teaching us in my
very elementary accounting class Im taking

That "durable" assets depreciate but do so over time
and one must make "adjusting" entries to transfer some
of that expense to appropriate expense categories.

Correct?

[Orazietti]

Accuracy is relative. My financial net worth is accurate enough.

I understand that, under the standard system of accounting, my autos should
be treated as assets. I just disagree with the principle that, in my
personal financial accounting, significantly expensive items that can be
capitalized and that have an exchange value must be assets. I use the
principle that, if I purchase something, however expensive, without any
intention of ever exchanging it for more than an insignificant amount, it's
an expense that gets booked when I pay for it and I don't bother to consider
it a financial asset. That includes my cars, my computer equipment, my
wife's wedding ring, etc.

I know there are accountants out there that are still shaking there head,
bewildered at my approach. For the record, I never suggested anyone else
follow my principle. The subject of auto as a one time expense was part of
an example to the original poster on how to be consistent.

Tony

"Rick Hess" <RHess51295All_Spammers@aol.com> wrote in message
news:2tj334F20s2vcU1@uni-berlin.de... "Orazietti" <aorazietti(nospamforme)@mindspring.com> wrote No, recording an auto as an asset is not THE correct method. THE correct method is the one that suites the situation. I agree. If one is not concerned with an accurate net worth, tracking one's assets may be more trouble than it's worth (pun intended). Many people, myself included, purchase an auto with the intent of using it for several years. We will be lucky to get 10% back on trade in, sale, or donation. The auto is not an asset nor a real contributor to net worth, it is just a big expense. For us, to think of our vehicles as having any value other than a way to get around town is a delusion. Tony, to say an auto is not an asset is simply untrue. To you it may be a SMALL asset, or insignificant asset -- too insignificant to bother with in Q -- but if it serves its intended purpose it IS an asset. What its value might be in "several years" is irrelevant. The fact that it has value today makes it an asset. And if you don't want to take my word for it, look at a credit application. Most have a left and a right column, the left being for assets. Guess what: The approximate value of your auto(s) is included in the Creditor's definition of assets and figures into your net worth. Depreciation is not a fancy word, it is a complicated mess. Look at IRS publication 463. Yes it is, and IMO, it has no place in Q. -- Rick Hess New Orleans To reply, eliminate All_Spammers

[Orazietti]

Since you are an authority on the subject, maybe you can inform the rest of
us.

So far, I have been told that an auto is an asset because it's proper, it's
correct, and just because it is. I have also been told that booking an auto
purchase as a one time expense is distorting and it will lead to an
inaccurate net worth.

Keeping this at a personal (non-business) level, what are the ramifications
of not treating a major purchase as an asset and expensing it all at once?
How is the true expense picture distorted? What is a true expense picture?
Why isn't a check written to my auto dealer just one big expense? What's so
important about net worth?

Maybe a real definition of assets and expenses would help, along with why
they are defined that way.

Tony

"Doug Ellice" <DouglasEllice@Comcast.net> wrote in message
news:4f9f5736.0410191004.8e8bd38@posting.google.com... me@privacy.net wrote...The auto is not anasset nor a real contributor to net worth, it is just a big expense. Forus,to think of our vehicles as having any value other than a way to getaroundtown is a delusion. You are sure making me "think" on this above. I tend to agree with you ... in the real world Here's another reason not to expense a major purchase of an item that will last more than one year: you distort your true expense picture. Of course most of the value of an auto will be "consumed" by an owner who keeps it for any length of time. And that money IS, as the person who says he expenses the whole thing at once said, a transportation "expense". It just isn't one enormous expense in the week it occured, and then NO expense ever again. Most Quicken users aren't bookkeepers or accountants. There are lots of people here who "only use Quicken to print checks", or "only use Quicken to track my spending". God bless them, but they shouldn't give too much advice to others about how to do the things they don't do. If all someone needs is a paper record that they spent $23,000 today on a Ford, they can use their paper checkbook register and not use Quicken. Quicken is designed to track income and expenses, assets and liabilities. Anybody is free to make up their own definition of the words "asset" and "expense", but they should probably not be too quick to share them. Doug

[Doug Ellice]

Orazietti wrote:

Since you are an authority on the subject, maybe you can inform the rest of us. So far, I have been told that an auto is an asset because it's proper, it's correct, and just because it is. I have also been told that booking an auto purchase as a one time expense is distorting and it will lead to an inaccurate net worth. Keeping this at a personal (non-business) level, what are the ramifications of not treating a major purchase as an asset and expensing it all at once? How is the true expense picture distorted? What is a true expense picture? Why isn't a check written to my auto dealer just one big expense? What's so important about net worth? Maybe a real definition of assets and expenses would help, along with why they are defined that way. Tony

Starting at the end, I can't tell you why things are defined the way they are.&nbsp; I don't know why an "apple" isn't called a "pear".&nbsp; Neither do I have time to discuss why you should call an apple an apple instead of calling it a pear.&nbsp;

Ramifications of "expensing" an asset:
your worth is understated&nbsp; to the extent that you do not appear to own a thing of considerable value that you do, in fact, own.&nbsp; Your expenses in one period are grossly inflated, and then moderately but not insignificantly understated in the periods that follow.&nbsp;

Now, you are free to say you don't care.&nbsp; I would ask then why you bought and use Quicken?&nbsp; If you do not care what you are in fact worth, and have no desire to track your true expenses, what in the world are you doing?&nbsp; One perfectly acceptable answer, from my perspective, would be "I use it to print checks rather than hand-write them, to keep in my computer a record of those checks, and to access my on-line accounts."&nbsp;

Here are the real meanings of the terms you have been discussing - - -

"Accountancy allows the creation of accurate financial reports (/wiki/Financial_reports) that are useful to managers, regulators, and other stakeholders (/wiki/Stakeholder) such as shareholders (/wiki/Shareholder), creditors (/wiki/Creditor), or owners. The day-to-day record-keeping involved in this process is known as bookkeeping. At the heart of modern accountancy is the double-entry book-keeping (/wiki/Double-entry_book-keeping) system. This system involves making at least two entries for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits. This provides an easy way to check for errors."&nbsp; -Wikipedia

Note to lurkers:
A good internet reference for Quicken users who desire to follow generally-accepted bookkeeping principles as they use Quicken, but have never studied in a classroom:

http://www.dwmbeancounter.com/tutorial/Tutorial.html


From Beancounter:

"Assets


Formal Definition: The properties used in the operation or investment activities of a business.



Informal Definition:All the good stuff a business has (anything with value). The goodies.



Additional Explanation: The good stuff includes tangible and intangible stuff. Tangible stuff you can physical see and touch such as vehicles, equipment and buildings. Intangible stuff is like pieces of paper (sales invoices) representing loans to your customers where they promise to pay you later for your services or product.
Examples of assets that many individuals have are cars, houses, boats, furniture, TV's, and appliances. Some examples of business type assets are cash, accounts receivable, notes receivable, inventory, land, and equipment."





Expense (Also Called Cost)
Formal Definition:Decrease in owner's equity resulting from the cost of goods, fixed assets, and services and supplies consumed in the operations of a business.



Informal Definition:The costs of doing business. The stuff we used and had to pay for or charge to run our business.



Additional Explanation:Some examples of personal expenses that most individuals are familiar with are utilities, phone, clothing, food, gasoline, and repairs. Some examples of business expenses are office supplies, salaries &amp; wages, advertising, building rental, and utilities.

Doug

[Charles Howse]

>I understand that, under the standard system of accounting, my autos shouldbe treated as assets. I just disagree with the principle that, in mypersonal financial accounting, significantly expensive items that can becapitalized and that have an exchange value must be assets. I use theprinciple that, if I purchase something, however expensive, without anyintention of ever exchanging it for more than an insignificant amount, it'san expense that gets booked when I pay for it and I don't bother to considerit a financial asset. That includes my cars, my computer equipment, mywife's wedding ring, etc.

Actually your arguments have persuaded me to STOP tracking some
trivial assets that I have been doing in the past.

I had two asset accounts one called "cars" and another called
"household inventory".

Well I looked thru the household inventory one and came to the
conclusion that most all of these items were of such insignificant
value if I sold them that it wasn't worth tracking as an asset. Most
of that crap only gets pennies on the dollar when sold anyway.
Example...... I bought a room A/C...... if I were to sell it at a
rummage sale or auction it would only bring a fraction of it's
original cost anyway.

Bottom line I deleted THAT asset acct completely and just expensed out
each item in a general "household expense" category!

However Im gonna go ahead and keep my car as an asset acct as it does
have some significant value

This has been a VERY informative thread guys! Thanks for all the
input!

[Rick Hess]

"Orazietti" <aorazietti(nospamforme)@mindspring.com> wrote Accuracy is relative. My financial net worth is accurate enough. I understand that, under the standard system of accounting, my autos
should be treated as assets. I just disagree with the principle that, in my personal financial accounting, significantly expensive items that can be capitalized and that have an exchange value must be assets. I use the principle that, if I purchase something, however expensive, without any intention of ever exchanging it for more than an insignificant amount,
it's an expense that gets booked when I pay for it and I don't bother to
consider it a financial asset. That includes my cars, my computer equipment, my wife's wedding ring, etc. I know there are accountants out there that are still shaking there head, bewildered at my approach. For the record, I never suggested anyone else follow my principle. The subject of auto as a one time expense was part of an example to the original poster on how to be consistent.

Of course you're free to utilize Q however you like.

The only thing I take exception to is you're calling an auto a non-asset.
How you use Q is your business. But if you point to a horse and call it a
chicken, and you do that publicly, someone may come in to correct you.

An auto is an asset. Whether or not you wish to record it that way in Q is
up to you. If you choose not to, your net worth will be off by (at least)
that much value.
--


Rick Hess
New Orleans
To reply, eliminate All_Spammers

[Rick Hess]

"Doug Ellice" <ellice9434removethis@comcast.net> wrote Rick Hess wrote:If you're suggesting depreciating the auto's basis (implied by your words"This "spreads" the expense over the life of the car") then you're
gettinginto an area for which Q was not designed, and does not handle well. Q
wasdesigned to track cash flows and equities. Tracking basis instead of
marketvalue will produce an inaccurate net worth. It sounds like you're describing depreciation of basis -- not
depreciation Well, of course. In accounting assets are usually valued at cost (plus any basis adjustments). And for a car, as you note, this is not an issue, since market value is usually less than cost.

I assume (a nasty word, I know) that most users of Q who record their autos
are doing so to include the value in their net worth -- not because the auto
was a business expense. I further suggest that the business basis should be
kept in the accounting for the business taxes, i.e. a tax preparation
application, which Q is not.

If the purpose of entering the auto is to benefit the user's net worth
portfolio, then what does the basis have to do with it? Granted, an auto is
a weak example (the market value and basis may be the same number,
especially for new autos), but still, I believe when entering assets into Q,
one should think in terms of market value and not basis.

EXAMPLE:
'63 T-Bird 427 low miles purchased in good condition from the little old
lady down the street for $5000.
You enter: $5000 in your asset account (that's your basis)
I enter: $20,000 in the asset account (that's the market value)

Had the same auto been purchased new for the same $5K, would it be worth
nothing today? If it had been depreciated over 5 years after its
acquisition and tracked that way, then in 1968 (and beyond) it's value
should be recorded as zero? (Rhetorical questions).

An extreme example, I realize. Real estate offers much better examples.

Quicken handles depreciation and appreciation just fine, I think. You just need the appropriate accounts.

I agree, but regarding market value -- not basis.

--


Rick Hess
New Orleans
To reply, eliminate All_Spammers