Noob Question

[Beth Leonard]

On Wed, Apr 16, 2008 at 12:39:47AM -0400, Michael DeBusk wrote:
> Rudi wrote:
> 
> > Cash from my 'Asset' bank a/c goes into the 'Expense'
> > account ( I selected 'Computer' as it's digital hardware ).
> > 
> > That all work's great and the cash transaction is recorded
> > fine. My question is regarding my new physical asset.
> 
> This is just my way of thinking about it, of course, but... unless it's
> a truly kick-butt professional-grade camera that costs many hundreds of
> dollars, I'd just call it an expense. Most personal finance is done on a
> cash basis. (The only thing I depreciate is my vehicle, because if I
> didn't, my net worth would appear about ten thousand dollars higher than
> it would reasonably be.)
> 
> The exception would be if you make more than a few hundred bucks a year
> with a photography hobby. If that's the case, the IRS might expect you
> to depreciate it.

Agreed.  Be very careful putting "things" in the asset column.  Just
because you paid $10K for a camera doesn't mean you can sell it for
that much if you run short on cash.  I love the example in the docs
about unrealized gains here: http://gnucash.org/docs/v2.0/C/gnucash-guide/capgain_example1.html
but you can also find more info about depreciation in chapter 11
here: http://gnucash.org/docs/v2.0/C/gnucash-guide/dep_concepts1.html

On the personal side, I only depreciate my car, by looking up the
blue book value (kbb.com) every January and recording the difference
between that and the year before as an auto expense.  Everything else
I buy is an expense because I have no intention of selling the rest of
my possessions.

For my business I do depreciate my video camera, but I let my accountant
do that.  I told her how much I bought it for and she runs the numbers
to figure out how much is a tax-deductible expense in any given year.

--Beth 
Beth Leonard
http://www.LeonardFamilyVideos.com