Appreciating Assets

[melloby]

Hi,

I know that most people book their assets @ original cost. There are provisions in the chart of accounts to account for depreciation.l

How do you handle the appreciation of assets such as land and buildings in the accounting module to relfect the market the value of the assets?

Or if you sell the assets above the original costs less the accumulated depreciation where do you book the surplus funds?

Thx

melloby

[Matt]

Under Generally Accepted Accounting Principles you should record the value of land and buildings at their acquisition cost. Generally, the appreciation of assets isn't recorded in the accounting records.

If you sell an asset for more than it's book value (acquisition cost less accumulated depreciation) you will need to record a gain somewhere. I would probably set up an account in the 4000 series income accounts to record the gain.

[Randy B]

Remember land is not a depreciable asset. The reason GAAP principles record fixed assets at cost is that is objective. Market values for fixed assets can be very subjective. Get three appraisals and you probably will get three different answers. Everyone would like to write things up for the gain but no one would like writing things down for a loss.