How do you account for an asset increasing in value without selling it?
submitted by neil o'sullivan

Randall

That's called appreciation, which is the opposite of depreciation. It doesn't happen much with equipment, but if your company does business overseas, maybe you hold a foreign currency that has increased in value.

If your asset, whatever it is, has gone up in value, you usually don't change the accounting records unless you're using fair value accounting. For most things, you just keep it at the original purchase price. But for some assets, like marketable securities, you might need to update the value periodically and record unrealized gains.

samson

If the value of something, like a work car, goes up, you'd just keep it as the same value on the books. It doesn't really matter that it went up until you sell it, and then you have a profit to record.

fredsimpson

If an asset's value increases but you haven't sold it, you don't record that increase in your books.

If you're using Fair Value Accounting, you'd need to update your records. That's when you value your assets based on what they're worth today, not what you bought them for. If you hold assets that change a lot, you'd probably use fair value accounting. Normally you wouldn't need to, like if you have some delivery trucks that change value. Not a big deal to update the value. It's a vehicle, and eventually it will wear out and be worth nothing. Depreciation is the only thing that matters usually. However, some companies hold securities, like stocks and bonds, or investment properties. Those are meant to go up in value, so you'd want to record that on your books.