I think you are on a good track. If one is going to do this, your approach
seems like a "best practice".

"Mark Fields" <mark_no_spam_f[at]siscom.net> wrote in message
news:468574b2$0$24773$4c368faf[at]roadrunner.com...
- quote -

- quote -

I did set up an asset account and for the value, I entered the value of the
car from an on line calculator, as if I was trading it back in. Then the
"hit" for the depreciation which already has occurred is there.

On my other cars I do have them in asset accounts (as is my home) and about
once or twice a year I enter a depreciation expense to the car based on the
value found using the on line calculators. The reason I do this is so I am
always aware of the car value vs. the remaining loan amount, so I never get
upside down on payments. It's not a big hassle, taking perhaps 3-4 minutes
to calculate the value and make the entry into Money. I do it at the same
time as when I revalue my house (using on line tools), except in that case
there is an appreciation,

- quote -

I must be the exception.


- quote -

yes, by the market.

In any case I expensed the down payment but wondered if there was a better
way to do it which is the reason for the question.

Mark

In addition to what Neil wrote, consider this: every cent you put into the
car that you don't get back out when you sell it is part of the expense of
ownership. Assuming the down payment is money you'll never get back out of
the car, it's part of the expense of owning the car, therefore expense it in
the here and now.

You could reduce the initial value of the asset account, setup by the loan
wizard, by the amount of the down payment and then set the down payment as a
transfer to the asset account. This will set the value of the asset account
to what you paid for it. But, as you note, the asset value will take a huge
hit the moment you drive the car off the lot, so, by the same logic as
above, it probably isn't worth the effort.

The asset account *should* reflect what the car is worth at any point in
time. But since the ONLY purpose of the asset account is helping generate
good net worth, the trade of accuracy of net worth calculations vs. the
hassles of maintaining the asset account value is entirely up to you. You
can enter additional expense transactions periodically to reduce the value
of the account to the value of the car.

Because cars (almost all of them anyway) do nothing but depreciate, many of
us do not bother with asset accounts to represent our cars.

Note also that this discussion assume you are going to account for the
depreciation the way the market does, not the way the tax man will require
if you are in a position to write off the car as a business expense.

"Mark Fields" <mark_no_spam_f[at]siscom.net> wrote in message
news:4684592e$1$24777$4c368faf[at]roadrunner.com...
- quote -

You have asked many different things and I will only respond to some.

The downpayment is showing up in an account someplace where you gave the
auto company a check. I don't know about you but I certainly consider a
downpayment an expense. As far as the depreciation I really don't know how
to handle it in your asset account other than maybe updating the asset value
on a regular basis

--

Neil


"Mark Fields" <mark_no_spam_f[at]siscom.net> wrote in message
news:4684592e$1$24777$4c368faf[at]roadrunner.com...
- quote -

I bought a new car, and took out a car loan.

The loan is set up and the asset acount is set up.

How would be the best way to treat the down payment, etc. Is it an expense
or somehow is it related to the asset acount in some way? Considering the
immediate depreciation expense when a car is driven off the dealer's lot,
should the asset acount reflect the purchase price and the depreciation
taken as a type of expense?

Mark