Tracking Currency Transaction Gains

[Stefan Soeffing]

I did some experiments with this. I'd be glad if someone knowledgeable 
could review that (Mike - I'd be very happy about your profound opinion 
on the trading account details).

Please see attached screenshot example: Buy 100€ at 1USD = 1EUR, then 
sell two times 50€ at 1.1USD = 1 EUR (=> total gain 10USD).
I used two different methods to account for the realized gain
A) First 'sell' transaction - include realized gain into split 
transaction (transaction 2 in screenshot)
B) Second 'sell' transaction - use separate transaction for realized 
gain (transaction 3 and 4 in screenshot)


Ad 1):
Mike Alexander wrote:
> This aspect of Selinger’s tutorial doesn’t really apply to GnuCash. 
>  Realized gains should be entered the way described in the GnuCash 
> documentation.
Documentation prescribes to include the gain into the split transaction. 
However, with trading accounts I get a slightly different picture than 
what is shown in table 11.2 (cf. 
https://www.gnucash.org/docs/v2.6/C/gnucash-guide/currency_invest1.html#currency_invest13 
vs. screenshot in the appendix). The difference is, that with trading 
accounts there is no need for what is the last line in table 11.2, the 
balance for the realized gain is automatically added/subtracted to the 
trading account split.
Besides that, the procedure to create that split transaction follows 
exactly the documented way (set "to amount" = 0 when entering the split 
for the capital gain/loss).

Ad 2):
Although not strictly foreseen by the documentation, it is in fact 
possible to have the realized gain/loss transaction separate. The method 
to create that transaction is in fact very similar to the above: Start 
entering a new transaction for the realized gain/loss, choose the 
Income:Gain or Expense:Loss account. Then in *expanded* (transaction 
journal) mode enter the gain/loss in the income/expense split (*). The 
Edit Exchange Rate dialog comes up, choose "To Amount" = 0. Enter. 
Gnucash will automatically create the transaction into the trading 
account and the result is exactly what Peter Selinger recommends for 
this purpose.

(*) Note: It is important not to enter the amount in the collapsed 
(single-line) view, as that would be interpreted as foreign currency 
(EUR) amount, but we want this part to be empty in the end: The final 
transaction shall have an empty row for the foreign currency (EUR) 
account - this is good since it makes the transaction show up in the EUR 
account (together with the corresponding 'sell' txn). If this behavior 
is not wanted, just remove the empty EUR account split line from the 
transaction, then the gain/loss is visible only in the corresponding 
Income/Expense account.


Conclusions:
- Coming back to David's original question, I think it is not _strictly_ 
necessary to have the gain/loss included in the split transaction (but: 
there *must* be some sort of realized gain/loss transaction for the 
balance sheet to balance - be it in the split txn or in a separate txn)
- I don't know if the latter is true _without_ trading accounts enabled
- It would be worth to update the documentation to include the "trading 
accounts enabled" situation (at least as a some sort of diff to "trading 
accounts disabled") - let me know if I can support here.


Finally: Sorry for such a long post - seems to be a difficult matter :-/

- Stefan
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