Unrealized gains: conclusions?

Mike Alexander mta at umich.edu
Mon Jul 7 18:44:01 EDT 2008


--On July 7, 2008 10:42:18 AM -0700 Charles Day <cedayiv at gmail.com> 
wrote:

> On Mon, Jul 7, 2008 at 10:29 AM, Mike Alexander <mta at umich.edu> wrote:
>
>> --On July 7, 2008 8:46:37 AM -0700 Charles Day <cedayiv at gmail.com>
>> wrote:
>>
>> > 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.
>>
>> I'm all in favor of making trading accounts optional.  They are a
>> global option in my patch, but really should probably be an option
>> associated with a specific Gnucash file.  However, I don't think it's
>> correct to say that trading accounts record unrealized gains.  They
>> record the net conversion between commodities which makes it possible
>> to calculate unrealized gains.  This is perhaps a small distinction,
>> but I think it is a useful one.
>>
>
> Ah, I think I see what you mean. Unless you have forgotten to record
> realized gains, or you are revaluing your existing holdings (or
> GnuCash is doing so against your will), trading accounts have a net
> zero balance. So trading accounts are not incompatible with cash
> basis accounting. Do I have that right?

Yes, that's correct, assuming you've closed out your position in the 
security.  I've attached a tiny file that shows the result of buying a 
stock and selling it for a profit.  I recorded capital gains using the 
lot scrubber and used trading accounts.

        Mike
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