Reporting: weighted average price source

[Derek Atkins]

"David G. Hamblen" <dhamblen at roadrunner.com> writes:

> A few years back (v1.8x), I had problems with these absolute values, and I
> patched report-utilities.scm,and commodity-utilites.scm so that the balance
> sheet would balance.  In addition to completely removing all the numeric:abs,
> I also had to do something about the division by zero in commodity-utilities
> when there was a zero share balance.  I'm using the "Nearest in Time"  and the
> problem went away in the 2.x updates.  If anyone's interested, I can dig up
> my old postings.  
>
> Anyway, I vote for getting rid of absolute values in bookkeeping.

It's not a question of book keeping.  It's a question of computing
the share price.  GnuCash stores buys as a positive and sells as
a negative.  As Christian pointed out before, if you buy x shares
for $y and then later SELL x shares for $y then a non-abs weighted
average gives you a price of 0/share!  Obviously this is wrong.
The weighted average should be $(y/x) per share.   But without
the ABS you get:

   y * x + (-y)*x        xy -xy       0
   --------------  ==    ------  ==  --- = 0
      x + x                2x         2x

When you use abs() here you get the right answer.

Of course, then you need to make sure you re-apply the negative
for sales.

So it's not a question of absolute values in bookkeeping.  It's
a question of absolute values in computing share prices.  Not
the same thing.

-derek
-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available