On Tue, Oct 5, 2021 at 1:34 AM psionl0 <gsch...@iinet.net.au> wrote:
> @Ajoeibin The problem with doing it your way is that at the end of the
> exercise, your assets is now a negative value instead of zero and rather
> than the gain/loss being included in income, it is just recorded as a
> change in the value of your assets.
>
> That is why I use Asset Sales as an income category and Cost of Sales as
> an expense category (so I can write off the cost of the assets sold).
>
>
re-reading I'd bet that someone is going to mis-understand (again!)
(looking for accounts (GIFI) in this area I find that for personal
accumulation there is a 'new' model
- - this is called the 'cost accumulation model' rather than the 'fair
value model' used in business
acquisition and sales)
example (specific for business)
Scenario 2: Disposal by Asset Sale with a Gain
Suppose that at the end of the second year, Motors Inc. decided to sell the
machinery to another company. At that time, the accumulated depreciation
was $2,000. Therefore, the total book value of the machinery was $1,000
(machinery value minus accumulated depreciation). However, the company
agreed to sell the machinery for $1,500. Thus, Motors Inc. must recognize
the gain from the sale. The journal entry for the disposal should be:
Asset disposal by sale with gain
Dr Cash $1500
Dr Accumulated Depreciation $2000
Cr Gain on sale $500
Cr Machinery $3000
One should see 'Machinery' as a form of 'Asset'.
So - - - end result - - - the way that I'm doing my records may not be the
most succinct
but it does cover ALL the bases and in a very orderly pattern.
This whole area gets quite a bit murkier if one is acquiring
stocks/options/other instruments
as part of a retirement vehicle - - - at that point all of this gets some
other inputs so that
a present value can be achieved without needing an actual sale to display
value.
HTH
Regards
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