On 12/7/2017 5:53 PM, David Carlson wrote:
Adrian,
While I am not an accountant, historically I have used a method similar to
that suggested by Adrien. However, I am intrigued by the answer provided
by Michael Novack, as it avoids the problem of overstating potentially
taxable income without needing to have a group of accounts to segregate
before running your tax reports at the end of the year.
Thus I am considering switching to a method modeled on his suggestion.
David C
There are other situations which might call for the adjustment of an
asset value (or liability amount) that should not be considered either
income or expense. I suggest looking in accounting texts with the topic
probably under "journal entries". Some examples:
a) Back in the 60's I went to school with the help of NDF loans. There
might be something similar today. They had a condition on the liability
amount. Could treat these are ordinary loans BUT every year you taught
forgave 10% of the loan.
b) When you opened your books, one of the major asset categories was art
work. Yes, if you sold a picture for a greater amount than its book
value, a capital gain (or for less, a capital loss). But suppose instead
a picture thought to be by artist A was later discovered to have been by
artist B (with VERY different values).
I am NOT an accountant. But I think these would be handled by "journal
entry" adjustments with equity being the other side of the transaction.
Michael
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