Book-currency feature and cost accounting

[Alex Aycinena]

Developers,

I am planning to add a feature to gnucash, primarily, but not exclusively,
related to currency accounting, and wanted to summarize what I was thinking
of. I would welcome feedback.

Since version 2.4.0, GnuCash supports trading accounts as described in
'Tutorial on multiple currency accounting' and 'Multiple currency
accounting in GnuCash' by P. Selinger (see
http://wiki.gnucash.org/wiki/Trading_Accounts). I believe Mike Alexander
added this feature.

In his tutorial, he (P. Selinger) mentions a 'reference currency method' as
an alternative to the use of trading accounts. This is essentially the
feature I wish to add.

Today, in file->properties->Accounts tab, you can turn "trading accounts"
on or off. I propose to change this to a selection of three alternatives:
use trading accounts, specify a 'book currency', or neither trading
accounts nor book currency. If trading accounts is selected, it would work
as implemented by Mike. If neither is selected, it would work as gnucash
does now without trading accounts selected. So no one would be forced to
use the new feature.

If 'book currency' is selected, it would require the specification of the
book currency in file->properties. Transaction entry would be modified to
ensure every split that was not in the book currency had a 'price' or
'exchange rate' associated with it (to the book currency). In addition, the
existing lot tracking capabilities would be used to track the 'cost' (in
book currency) of all accounts not denominated in the book currency (lots
would automatically be created rather than having the user go through the
Actions->View Lots process). In entering any transaction that disposes of
non-book-currency amounts, the user would be provided with assistance to
calculate and book any gain or loss associated with the transaction based
on these tracked costs. The idea is that several policies would be used for
this purpose (probably implemented in phases): LIFO, FIFO, average cost
(perhaps), manual specification. Much of this lot tracking has already been
implemented but I don't believe it has been fully tested.

A 'Cost and Unrealized Gains/Loss' report would be added to the menu if
this feature is selected. It would show, for all non-book-currency
accounts, as of a user-selected date: name, currency/commodity, cost,
quantity, rate, value, unrealized gain/loss. Optionally, for each account,
lot detail would be shown and, for each lot transaction detail would be
shown.

The US Income Tax Report would be enhanced to use the booked gains/losses
(bug 554397).

Among the changes I foresee are:

- File->Properties: specify and select 'book currency', if selected,
default gain/loss account and default lot tracking policy.
- Account Edit: for 'non-book-currency' accounts, specify gain/loss
account, lot tracking policy, short-sales allowed, currency account is
priced in, skip lot-tracking flag.
- Register Transaction Entry: transaction currency will be 'Book Currency'
rather than currency of register transaction is entered from, raise 'Edit
Exchange Rates' dialog if split not in book currency, create/update lots
for non-book-currency splits, if a sale (subject to 'short sales' rule),
uses Lot Tracking Policy to calculate cost amount and tentative gain/loss
- Stock Split: make compliant
- Lot Viewer: Modify existing capability so that integrity can't be messed
up. Also, it should not be available in menu for book-currency accounts. It
currently has a problem where it seems to generate multiple Realized
Gain/Loss entries under some conditions I haven't figured out yet.

It will probably take me several months to get this done. As I said above,
I welcome feedback/comments.

Regards,

Alex