I adjust my 'house - market adjustment' account to reflect the difference
between market value and book value. There are several public sources to
estimate market value.

I include or exclude the market adjustment account in my net worth report,
depending on which information I want to see.
--
Chris Cowles
Gainesville, FL



"Dick Watson" <littlegreengecko[at]mind-enufalready-spring.com> wrote in
message news:OB961qeDHHA.4808[at]TK2MSFTNGP03.phx.gbl...
- quote -

You raise a very good question: should the Asset account reflect Basis
(great for tax purposes) or Value (great for Net Worth purposes).

One scenario, alternate to yours, is to track additions to basis and changes
in value both in the Asset account and, later, depend on the remarks and
categorization to separate one from the other via reporting or hand work in
an Excel sheet or similar.

"Chris Cowles" <spam_magnet[at]remove-me-bellsouth.net> wrote in message
news:ezEPIYeDHHA.2356[at]TK2MSFTNGP03.phx.gbl...
- quote -

Thanks to both of you, Chris and Dick, for your responses. Both of you have
given me a lot of good ideas to handle the situation. I want to be as
accurate as I can but not make it too time-consuming. I wish I would have
taken more classes in accounting!

Thanks again.

--
Brad

Comments below.

"Brad" <Brad[at]discussions.microsoft.com> wrote in message
news:9F95A38E-134D-4B06-ACCF-CA3957B97AF2[at]microsoft.com...
- quote -

Market value is probably better if you want acurate Net Worth reporting.

- quote -

Sure. But see above.

- quote -

Yup. You may want, say, a split to Housing : Maintenance and Transfer :
[houuse as asset] to reflect the issue noted above.

- quote -

Either would work. There isn't a One Right Answer. You also might want to
use something like Investment Income : Property Appreciation (for the house)
and Automobile : Depreciation (for the automobile). I choose both of these
to put the gains (house, hopefully) and losses (automobile almost certainly
unless you are driving, say, a 1956 Mercedes 300 SL Gullwing) into some more
meaningful grouping. The Automobile : Depreciation, for instance, surely
reflects the reason for the expense in the category with other like
expenses.

Assuming your original home valuation was based on what you paid, and you
have not recorded other transactions related to market value adjustments,
the current asset value is the basis. Adding improvements adjusts that
basis upward by the amount of the investment. If you're talking something
you're going to report to the IRS, some things are qualified to add to the
basis, and other things must be expensed. If you think that's relevant,
contact an accountant.

Record your cash/check/credit card expenditures as transfers to the asset
account. Split them if not all of the transaction applies to the house.
When you bought your house, did you separate the cost of materials from the
cost of construction labor? No. Cost of installation is part of the cost of
the improvement, unless doing it yourself. In that case, only related cash
expenditures are, like tool rental.

If you want to record market appreciation, you can do it with a direct
adjustment into the account, or by creating a separate account called
something like 'House - market appreciation'. Increases should be
categorized as income.

I use the second approach because it keeps my accounts cleaner. It also
allows selective inclusion or exclusion in reports. You can do that for Net
Worth, for example, to show book value vs. market value.

It's all funny money until you close on a sale, anyway. Do what works for
you. Take care to consider how easy it will be to use the information
sometime in the distant future, should you need to.
--
Chris Cowles
Gainesville, FL


"Brad" <Brad[at]discussions.microsoft.com> wrote in message
news:9F95A38E-134D-4B06-ACCF-CA3957B97AF2[at]microsoft.com...
- quote -

I'm going to replace the windows in my home which I own, and not all at once.
I have an asset account set up for the house that is tied to a mortgage
account. How do I keep track of the appreciation of the house due to
improvements?

1. Should the value increase by the total cost of window replacement or the
market value of the improvement (market value percentages of common
improvements can be found on the Internet)?
2. Is the cost of installation also included in the appreciation amount? I
know the answer is probably 'no', but how do I account for the installation
cost in the transaction?
3. How would I make the transaction? When I make the payment to the
installers, do I make the category a transfer to the asset (house) account
and then make adjustments to decrease for market value and/or installation
cost?

On another note, I want to keep track of appreciation/depreciation on my
house and vehicle. What is the best way to do that? Should I make it two
categories, "Appreciation" and "Depreciation", or should I make one category,
"Account Adjustment", and keep negative and positive entries together?


--
Brad