Accounting for Realized gains/losses

[Stefan Söffing]

Hello Alberto,

I'm struggling with the very same issue [1] and so far have not found a
final and satisfying solution. But I'm happy to share what I have
learned so far.

A) It _is_ possible to enter the gain transaction to achieve exactly
what Peter Selinger proposes in his tutorial - it is however not exactly
straight-forward how to do this [2] (In fact is is explained in the
documentation; for trading accounts disabled, though)

B) Now we know how to enter the transaction - but what is the amount?
Unfortunately, I did not yet find a satisfying solution for this.
=> Does not work (by design): According to Peter Selinger's tutorial, it
is sufficient to check the value of the trading accounts, with the
foreign currency converted to your report's base currency. Issue with
GnuCash: If you have multiple foreign currencies (or funds, stocks, ...)
they all share the same base currency trading account, rendering it
impossible to allocate the value to a single currency.
=> Does not work (probably a bug): If you want to calculate gain/loss
based on FIFO, the Lots feature should come in handy. This works fine
for stock, fund, etc., but currently seems to be buggy for foreign
currency accounts [3].
=> Use report value: Create balance report, set your desired price
source and check the "Unrealized Gains/Losses" line in the report. Use
this value for the realized gain transaction.

C) Note: In general I have the feeling that this is complex matter and
covered only partially by GnuCash. Especially if your legislation
requires some complex valuation of your commodity assets, this might
currently not be (easily) achievable with GnuCash [4].

Disclaimer: I'm not an accountant nor expert GnuCash user. If anyone has
some hints on above mentioned issues, I'm very eager to discuss.


Cheers
- Stefan


[1] I tried to get an answer, with very limited success (might as well
be that my question wasn't stated clearly enough):
http://gnucash.1415818.n4.nabble.com/Use-of-lots-for-gains-losses-when-using-multiple-currencies-tp4686888.html

[2]
http://gnucash.1415818.n4.nabble.com/Tracking-Currency-Transaction-Gains-tp4687966p4688027.html

[3] https://bugzilla.gnome.org/show_bug.cgi?id=775903

[4] see also
http://gnucash.1415818.n4.nabble.com/Multiple-price-sources-in-reports-tp4688099.html


Am 23.12.2016 um 17:33 schrieb Alberto Dante:
>>
>>   Accounting for Realized gains/losses
>>
>> *mrskhris* mrskhris at gmail.com
>> <mailto:gnucash-user%40gnucash.org?Subject=Re:%20Re%3A%20Accounting%20for%20Realized%20gains/losses&In-Reply-To=%3C1370028050081-4662242.post%40n4.nabble.com%3E>
>> /Fri May 31 15:20:50 EDT 2013/
>>
>>   * Previous message: Multiple payments for the same purchase
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>>
>>
>> ------------------------------------------------------------------------
>> Hello fellow gnucash users,
>>
>> I'm currently very confused about one of the features of gnucash -
>> namely,
>> trading accounts. Our business has assets in CAD and USD, and our main
>> currency is CAD. I've turned on trading accounts and saw that gnucash
>> successfully added all necessary splits - and that's what I expected.
>> Now,
>> the year end is here. When I open Balance sheet, I see an entry Trading
>> Losses at the very end of the report, and this is also something I
>> expected.
>> Now, very helpful tutorial by Peter Selinger
>> (this one
>> -http://www.mathstat.dal.ca/~selinger/accounting/tutorial.html
>> <http://www.mathstat.dal.ca/%7Eselinger/accounting/tutorial.html>)
>> mentions (quote):
>> A currency trading account reflects currency exchanges made in the
>> past, and
>> in an ideal situation where exchange rates never change, its balance is
>> supposed to be zero. However, as the exchange rate fluctuates, so
>> does the
>> value of the currency trading account, and such fluctuations correspond
>> exactly to currency gains and losses. *At the end of an accounting
>> period,
>> one may move the actual ("realized") gain or loss to an income or
>> expense
>> account denominated in the reference currency.*
>>
>> So, here is my question. How exactly do I do that? I already have
>> Foreign
>> exchange gain/loss account and it's mostly supplemented by transactions
>> arising from currency fluctuations between creating invoice for a
>> customer
>> and closing that invoice.
>> But how do I account for realized losses/gains? Do I add extra
>> transactions
>> to Trading accounts? I tried, and it doesn't seem to be the case, since
>> every effort to add transaction to security trading account (USD)
>> immediately results in offset splits appearing - and that's logical,
>> because
>> I'm trying to do transfer between two accounts in different currency.
>> So,
>> what's the right way? Does anyone have an enlightening idea?
>>
>>
>>
>>
>> -- 
>> View this message in
>> context:http://gnucash.1415818.n4.nabble.com/Accounting-for-Realized-gains-losses-tp4662242.html
>> Sent from the GnuCash - User mailing list archive at Nabble.com.
>> ------------------------------------------------------------------------
> Hello, I've found this thread without any reply.
> I've the same doubt: at the end of an accounting period, how to make
> "realized" capital gain/loss due to multi-currency transactions in the
> trading account?
> For example, I can imagine a trip to Australia for one month; during
> this month I had some expenses (AUD) paid by my credit card (EUR) and
> by cash (AUD bought from EUR exchange before the departure).
> All these expense transactions affect a bit the total of trading
> accounts Trading: CURRENCY:AUD and Trading: CURRENCY:EUR, giving a
> capital gain/loss, due to daily fluctuations of the exchange rate
> EUR/AUD.
> Is it possible to move this capital gain/loss contribute from trading
> accounts to Expense:Travel:Australia (EUR), having a decrease (capital
> gain)/increase (capital loss) of the total cost of the trip? If yes how?
> Is there something wrong in my brainstorming?
> Thanks, Alberto
>
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