Fw: Unrealized gains: conclusions?

Paul Schwartz pmjs1115 at yahoo.com
Mon Jul 7 11:58:35 EDT 2008


Forgot to hit Reply to all :-(


----- Forwarded Message ----
From: Paul Schwartz <pmjs1115 at yahoo.com>
To: Charles Day <cedayiv at gmail.com>
Sent: Monday, July 7, 2008 9:57:11 AM
Subject: Re: Unrealized gains: conclusions?


As a nod to those to impatient to follow the proper posting: Definitely YES.


----- Original Message ----
From: Charles Day <cedayiv at gmail.com>
To: Paul Schwartz <pmjs1115 at yahoo.com>
Cc: stepbystepfarm at mtdata.com; gnucash-user at gnucash.org
Sent: Monday, July 7, 2008 9:46:37 AM
Subject: Re: Unrealized gains: conclusions?

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.

************ Yahoo's quoting practice is broken.

Yes, I think we must maintain a program that allows people to implement their needed accounting rules, even if it means those moving from Quicken or some other personal money management program have to pay more attention to the details of their holdings.

Thanks for your efforts.

Paul


      


More information about the gnucash-user mailing list