Unrealized gains: conclusions?

[Charles Day]

On Sun, Jul 6, 2008 at 7:21 PM, Paul Schwartz <pmjs1115 at yahoo.com> wrote:

> ----- Original Message ----
> > From: Mike or Penny Novack <stepbystepfarm at mtdata.com>
> > To: Charles Day <cedayiv at gmail.com>
> > Cc: "List, GNUCash-User" <gnucash-user at gnucash.org>
> > Sent: Sunday, July 6, 2008 4:11:37 PM
> > Subject: Re: Unrealized gains: conclusions?
> >
> > Charles Day wrote:
> >
> > >Now that we have all had a chance to chew on the recent unrealized gains
> > >discussions, I wonder if we might be able to come to some conclusions.
> Here
> > >is my list for your comments and/or additions.
> > >
> > >
> > >
> > I have kept out of it so far because folks seem to be considering
> > "unrealized gains" only in the context of "cash basis" and "trading". My
> > opinion is that it is asking far too much to expect ANY automated
> > bookkeeping system to decide how "gains" that do not involve external
> > transactions are properly accounted. Among other things that depends
> > upon ........
> >
> > a) cash or accrual basis
> > b) type of business and laws pertaining thereto.
> >
> > Just one example
> >
> > It doesn't just depend on the sort of transaction. Because I am NOT in
> > the "timber business", if every now and then I sell some "stumpage"
> > that's an incidental capital gain reported when it happens and I do not
> > have to report the increase of value of inventory. No unrealized gains
> > form the annual growth of trees. But if I were in the "timber business"
> > the sale of "stumpage" (or logs if I handled the felling operation too)
> > would not be a "capital gain" and I would have to report the unrealized
> > gain that growth represented (and get to charge "depletion" against it
> > too). Required keep books using the "accrual" method.
> >
> > Michael
>
> I agree very much with this view. Gnucash should be a package that does the
> bookkeeping that allows you to report your accounting status accurately.
>  Making assumptions about the way accounting should be done for everyone
> will seriously limit the utility of the package. Unrealized gains should be
> handled manually according to each individuals needs. Gnucash needs to focus
> on accuracy; allowing splits in the transactions gives everyone the
> flexibility needed; changing your accounting books to keep up with changing
> security prices imposes a rigidity on users that is not desirable for an
> accounting package. Providing a price db for users to mess with as an option
> is okay, but automagic changes are not desirable.
>

No one is saying that it should be compulsory to record unrealized gains.
The only reason I had to record unrealized gains in my examples was because
the Trial Balance report is broken.  Also, it is unfortunate that the
reporting system currently insists on revaluing all holdings, and there are
several enhancement requests (bug 521403, for example) that cover this. I
have been asking questions on the gnucash-devel list with the intention of
making a patch for this.

So from your and Michael's comments, I think we can add these to the list:

9. Entering unrealized gains is optional and must remain so. Therefore use
of trading accounts must be optional.

10. Revaluation of commodity holdings for reports should be optional.


> Just MNSHO
>
> Paul
>
>
>
>
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