Fw: Handling a Stock Spin Off

[David T.]

Any comments? 

--- On Tue, 9/14/10, David T. <sunfish62 at yahoo.com> wrote:

> From: David T. <sunfish62 at yahoo.com>
> Subject: Handling a Stock Spin Off
> To: "Users Gnucash" <gnucash-user at gnucash.org>
> Date: Tuesday, September 14, 2010, 1:22 PM
> I am trying to get my brain around
> the transactions and splits needed to track a stock spin
> off. Back in January of 2008 (how ever did I miss it for so
> long!), DISH spun off SATS 5 to 1 (that is, for every share
> of DISH, I received .2 shares of SATS). According to one
> site I found, these are the data points I need to consider:
> 
> 1. Spinoff date - 1/1/2008
> 2. Parent company - EchoStar Communications Corporation
> [DISH]
> 3. Remaining basis percentage of Parent Company, [DISH] -
> 82.5610.
> 4. Number of shares held in parent company - 200.
> 5. Daughter company - EchoStar Holding Corporation [SATS]
> 6. Number of shares of SATS received - 40.
> 7. Price per share of daughter company - $35.
> 
> I am not entirely sure how I should be tracking this in
> GnuCash. A MoneyDance forum gives the following
> (MoneyDance-centric) set of instructions:
> 
> 1, Leave the original purchase entry alone
> 2, Do a SellXfr of the original shares at $0 dollar amount
> (I created a special category "Stock Spinoff" to account for
> the double-entry required)
> 3, Do a BuyXfr to record acquiring the new parent shares at
> the published adjust cost basis (as per company press
> release) of the original share price on the spin-off date
> 4, Do a BuyXfr to record acquiring the new child shares at
> the published adjust cost basis (as per company press
> release) of the original share price on the spin-off date
> 
> What I *think* all this means is:
> Sell 200 DISH @ $0 to Equity:Asset Cost
> Buy 200 DISH @ .82561 * 2.09635 [my orig purch price] from
> Equity:Asset Cost
> Buy 40 SATS @ $35 from Equity:Asset Cost
> 
> FYI: Equity:Asset Cost is the account that the shares came
> from originally.
> 
> Is this correct?
> 
> Thanks,
> David
> 
> 
>       
>