Posted by Ken Holmes on August 12, 2008 at 07:23:25:
In Reply to: Re: Question re. Business Income Statements posted by IB (NJ) on August 12, 2008 at 07:13:20:
Example:
I buy 123 Elm St for 100K. I set up as an asset account the 100K plus say $1000 in closing costs. I spend $2000 on interest, which I also put into the asset. When I sell for 150K, I show 150K as income and $103,000 as COGS. Again, I could expense the interest when I write the check, but I typically dont unless year end, as with the way I do it a simple "click" on the asset acct shows me at a glance what I have in the property. That's nice for bargaining. Someone calls and offers me 140K, when I was asking 150K, and I can quiackly see the sum of all money spent on the project. Once I have expensed items seperately at the end of the year such as interest or insurance, it takes a little more work to see what I have in it.