How to record asset info -- the value of the "thing" (not the purchase trans or the loan info)?

Question

Hi -- In Quicken Deluxe for Mac, are there any best practices for entering information about assets? This feels like it ought to be a basic operation, but I can't find any specific information about how to do it.

Example:
 - We bought a camper.
 - We financed the purchase.
 - I set up a loan account to track the loan.

- In the Loan register, I entered all the details about the purchase transaction using a split transaction that shows the purchase price, the sales tax, and everything else that was financed. Each of the split lines has the appropriate category for the line: the price for the camper has a category of “Camper”; the sales tax has a category of “Sales Tax”, and so on. The “payee” for the purchase transaction is the RV dealership. This establishes the initial value of the loan.

- In the checking account, I entered:
 -- (1) the initial deposit (payee -> RV dealership; category: Camper).
 — (2) the monthly transactions that pay off the loan (payee -> Financial Institution that holds the loan; categories: [transfer:LoanAccount] for the principal and Loan Interest for the interest.

This is fine; I can track my loan with no problem.

Now I’m looking at the Property & Debt group. It seems that the next logical step is this:

— Set up an Asset account for the Camper.

The Philosophical Questions:
 As I understand it, Asset accounts allow me to track the value of the things we own (even if they’re not yet paid off) and the balance in the Asset account will help me determine our Net Worth.
 Am I correctly understanding the purpose of the Asset account?
 This approach doesn't have any connection between the Loan acct and the Asset acct. Does that matter? Should the initial transaction in the Asset account instead be a transfer from the Loan?

The Nitty Gritty Questions:
 If the transactions in the Loan and the Asset accounts are standalone (not transfers) , then what *specifically* do I enter in the Asset account transaction?
 -- What goes in Payee? Do I use the same category — “Camper”, in this case — that I used for the purchase price in my Loan account? Or some other category? 
 -- Decrease/Increase — I’m guessing that I would enter, to begin with, the current value in Increase. Periodically, I would enter amounts in Decrease to show depreciation — Is there a category that’s intended for depreciation entries or would I use the same category as the original asset transaction?

Thank you for any and all guidance :-)

MakesMeLoony · Answer

Thank you, jacobs.

Sadly, the answer to your spot-on question of "what [am I] interested in tracking in Quicken?" is murky. I just really want to get a handle on Our Finances. Part of that, my little brain thought, meant getting a clear picture of the value of our "things", which is one component of Net Worth (at least, I think of it that way). However, I may simply be confusing the goal of knowing what we own (good for insurance purposes, eventual estate planning) with the value of track expenses in Quicken.

I'm going to let your response sink in for a few days. You gave me a lot to think about; if I still have questions, I'll reply to this thread.

jacobs · Answer

Nothing here is automated (other than the loan payments), so it comes down to what you're really trying to track. Is it the current book value of the camper (i.e. purchase price minus depreciation)? Is it the current street value of the asset (e.e. what it's worth in your Net Worth if you sold it today)? Do you want to record improvements to track the basis for your asset? There aren't necessarily right or wrong answers; it's what you want Quicken to be showing you. For instance, do you want a depreciation in your annual report of income & expenses? If you're trying to track your annual cost of living, does including a non-cash expense like depreciation help you understanding/predicting your spending, or does it cloud the picture?

Let's take something more basic: a house. I could use Zillow or some other service to estimate the current value of my house, and periodically enter transactions to increase or decrease the value of the asset. Since I don't plan to be selling my house anytime soon, and since I can look it up in Zillow anytime I want, I don't bother doing this in Quicken. On the other hand, I wanted to track the cost basis for my house, in case I need to document the gain when I sell it. So I created an asset account, and marked it as Separate because I don't want to see this value in my Net Worth. When we make capital improvements to the house -- an addition, a new roof, a new heating and air conditioning unit, etc. -- I record those transactions in my asset account (including negative transactions for things I've replaced), so that I have a record of the cost basis. I started this because years ago when we bought our house, the tax-free limit on the capital gain was lower than it is today; I believe currently anything up to a $500,000 gain on the sale of a principal residence is not taxed. So I don't spend a lot of time on this, and it's shy of 100% perfect and complete, since I don't think we'll ever sell for $500,000 more than our cost -- but at least I have most of the data there should I ever need to refer to it. For what I do, those transactions in my "Home Cost" account are duplicate entries for the purchases we've made; I don't categorize them, since the purchase in our checking or credit card account is categorized, and I don't want to categorize expenses twice.

Back to the camper: if this were straight accounting, you'd have an asset account (the gross cost of the camper: your deposit + the loan amount paid to the dealer), and each month/year you'd record a debit to depreciation expense and a credit to a contra-asset Accumulated Depreciation account. Over time, the value of the asset would be unchanged, and the value of Accumulated Depreciation would increase until it matched the value of the asset once fully depreciated. You can do this in Quicken, but it's a bit of work -- and for most people, unnecessary extra work. so again, we come back to the question of what are you interested in tracking in Quicken?