Investment income (was Re: Questions About Investment Accounts)

[Ian Konen]

On Sun, Apr 7, 2013 at 12:04 PM, David Carlson
<david.carlson.417 at gmail.com>wrote:

> On 4/6/2013 5:55 PM, John Ralls wrote:
> > On Apr 6, 2013, at 11:22 AM, Ian Konen <iankonen at gmail.com> wrote:
> >>
> >>
> >> So out of curiosity I created a security for a fake company, and
> purchased 100 shares at $10 / share (with a balancing transaction from a
> cash account).  Then I put some manual entries in the price editor so that
> it was later valued $15/share.  Generating a balance sheet at that point in
> time has a line called "Unealized Gains" worth $500, as well as a line for
> the security with shares and total current value (after I set the commodity
> option to use "nearest price").  So far so good. But then if I sell those
> stocks at $20 / share and enter a $2000 transfer back to the cash account,
> the balance sheet at a later time still labels that $1000 profit as
> "unrealized gains" even though it has quite clearly been realized at that
> point, and the calculation is (correctly IMO) using the share price of the
> sale transaction instead of the value from the price editor ($15/share) at
> the time.  If I generate a profit and loss statement covering that entire
> period, it shows 0 income/profi!
>  t!
> >   whatsoever even though there was a real $1000 profit.
> >> It's those last two points that seem wrong to me.  I guess I had
> assumed that GnuCash would automagically create a realized gains income
> account and fill it to reflect stock price changes at sale, but perhaps
> that's too complicated to code.
> >>
>
> Ian,
> In that test file run a trial balance, being sure to include the dates
> of the security transactions.  You will probably find that it is out of
> balance because you did not include the lines in the closing
> transaction(s) to reduce the cost basis to zero and apply the "realized"
> gain to an income account.  If you do that, the report should not show
> any unrealized gains.
>
> David C
>
>
Ahhh...yes, you are correct I had not entered the sale correctly.  Despite
having just recommended reading about stocks in the tutorial to Mark, I had
not yet read the "selling shares" section of the tutorial myself ;-).  The
transaction still looks funny to me when done correctly, but I think I
understand why it's needed.

It does bring up another behavior that probably should be considered a bug:
 Having two splits for an account in the same transaction causes the
transaction to be displayed twice in the register.  It seems like it's only
a display bug and doesn't double count the effect of the transaction (I'm
sure it's because the code deciding what transactions to show in the
register is just looking at splits and not checking for redundant listings
of the same transaction), but it looks misleading.


>
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-- 
Ian Konen
iankonen at gmail.com
www.linkedin.com/in/iankonen
978-821-6498