I have a client who proccessed a note for one of his clients on a second mortgage ... The client defaulted on his note, the second mortgage. So the lender was able to foreclose on the second mortgage and take possesion of the property (deed is his now). Now the lender has aquired a new asset ( the property ) ( which keep in mind, the note for the second mortgage is allowance for the uncollectable note and he still has to pay the first mortgage on the property). Now that it has become a company asset what value do I depreciate the property at? ( its a 2 unit home not land ). Do I do it based on the value owed on the note at defaut? Or the original cost the property was purchased for by the original owner? Or do I depreciate it on some other factor I am not aware of.