Originally Posted by
Roody
I think there's some kind of accounting principle that says you can't count both the monthly payment and the depreciation. (You can count both the interest payments and depreciation, I believe.)
I'd say you are correct. Interest is clearly an expense. So is depreciation. If you estimate the car is worth $100 less at the end of the month, then your theoretical 'car assets' account is $100 lighter.
But, paying off some the principal can not be counted as a cost. You have simply transferred assets from 'cash' to the 'car assets' account. You have not gained or lost anything, in theory. In reality, I'd rather have the cash.