If you hold assets for business purposes, thier decline in value over time can be treated as a deduction for tax purposes, called Depreciation. On the other hand, if you own assets such as real estate, collectibles (like paintings), and investments (like shares in companies), you may see them appreciate in value over time. In this case, you must recognize -- for tax purposes -- what are called Captial Gains
This section discusses the handling of depreciation and appreciation of assets in GnuCash. It also provides a brief introduction to the related tax issues.
Warning: Be aware that different countries can have substantially different tax policies for handling these things; all that this document can really provide is some of the underlying ideas to help you apply your "favorite" tax/depreciation policies.
Appreciation and depreciation of assets are treated somewhat differently:
Depreciation is usually recognized (the technical term is accrued) as an ongoing expense, gradually reducing the value of an asset toward zero. Depreciation is usually only calculated on assets used for professional or business purposes, because governments don't generally allow you to claim depreciation deductions on personal assets, and it's pointless to bother with the procedure if it's not deductible.
Capital Gains, which could be called asset value appreciation, are typically not recognized until the asset is sold, and at that instant, the entire gain becomes income. Governments tend to be quite interested in taxing capital gains in one manner or another. (As always, there are exceptions. If you hold a bond that pays all of its interest at maturity, tax authorities often require that you recognize interest each year, and refuse this to be treated as a capital gain. The phrases accrued interest, or imputed interest are often used to scare those who are sensitive to such things...)