Friday, May 04, 2007

Depreciation and Appreciation

When buying assets, such as vehicles, the price of the asset may depreciate over time. Although it's not strictly necessary to put this into Microsoft money, you may want to avoid sharp dips in your 'net worth' by recording the asset and then writing off the value over time.

In FAQ Article 474, I mention the use of appreciation/dereciation and how to record it in the program. In the following article, it can be used as a mechanism of writing off the value of an asset bought for cash.

Of course, in a non-business scenario, choosing a period to write off an asset is very subjective. When I do it, I typically do it by writing off a nominal amount each month, and then reducing this nominal amount each year. It the asset ever hits a zero value, then I stop depreciating it.

With house price appreciation, then I typically use a fixed amount each quarter. However I review the asset value each year to make sure I haven't got it totally wrong. Recently having my house on the market has enabled me to put in a very accurate valuation (accurate to the point I knew how much someone was willing to pay for it).


NoCouth said...

Glyn, Regarding two similar issues: Accounting for appreciation/depreciation in assets, AND transferring loan money borrowed to the asset for which it was borrowed: In Money 2007 Home and Business, every transactions requires a category. Older versions of Money didn't seem to require categories, or at least it seemed you could "turn off" the requirement. In 2007, however, I cannot find where one "turns off" the message, "Require a Category. You haven't categorized this transaction. Money requires a category for each transaction so it can distinguish business from personal transactions and provide accurate reports."

I've also closely examined Chris Cowles' round-about way of doing this in Dick Watson's Unofficial FAQ, but I don't understand it.

Any help would be greatly appreciated.

Glyn said...


the option should be at tools-> settings -> category settings, and then the option 'require a category for each transaction'. I didn't think it had been removed in 2007. I'll update the article with that point at some time.

I just had a quick look at the workaround on the Unofficial FAQ from Dick Watson, and I struggled too. Maybe the way I do things is wrong, but I'm just sticking to a simple method which I know...