GnuCash: how to enter the purchase of a corporate bond with accrued interest

[Wm]

Thu, 26 Feb 2015 08:06:12 <mcn98l$966$1 at ger.gmane.org>  Larry Evans 
<cppljevans at suddenlink.net>

>On 10/21/2010 06:04 AM, Christopher Singley wrote:
>> On Thu, Oct 21, 2010 at 12:36 AM, JDDomine <jddbusiness at juno.com> wrote:
>>> I have not figured out how to enter the purchase details of a corporate bond
>>> with accrued interest.  If the interest is rolled into the purchase price,
>>> it would erroneously affect any capital gains calculation if / when the bond
>>> is sold or called.  How can this be handled with GnuCash??
>>
>> Accrued interest doesn't increase your cost basis; it is interest
>> expense.  You report it to IRS as a negative number on Schedule B,
>> where it should offset items of interest income coming in on
>> f1099-INT.
>>
>> You can book it as two separate transactions - one for the securities
>> purchase, and another for the payment of interest.
>
>To see if I understand correctly, I've provided screenshots of a simple
>account tree, the Bond asset account ledger, and the Bond interest
>income account, and the corresponding irs Schedule B.
>
>Do these screenshots accurately reflect what you've said above?

You're replying to a thread from 2010 so I'm just going to treat it as 
background.

When you buy this sort of beastie you are paying for the asset and the 
interest accrued.

I think you've got the purchase of the accrued interest (an expense) and 
the interest you receive (income) the wrong way around. You should have 
an expense (negative income) when you buy the interest portion and 
actual income when you receive interest.

So if your purchase was 103 (100 + 3) and you received 5 interest your 
net interest income account should show 2.

I've no idea about the tax form as I'm in the UK.

-- 
Wm...