Accounting for Realized gains/losses

Tue Dec 27 12:46:22 EST 2016

Hello Stefan,

I'm sorry for the delay due to Christmas time.
Thanks so much for sharing me your considerations on this very difficult 
matter: I've read with attention your posts.
Telling the truth: I had not a fully understanding.
This argument is becoming very hard for me: I'm not a professional 
accounter nor a GC expert user.
Modestly, I think I could add the following considerations:

1) Theoretically, Peter Selinger tutorial states that there are no 
differences on capital gain calculations of goods, securities (stock, 
bond, fund, ...) and currencies.
Practically, GC can handle completely capital gain (unrealized and 
realized) only using securities (Mutual Fund and Stock account type).

2) Trading account stores all kind of capital gains (due to securities 
and currencies fluctuations), but:
- securities in Mutual Fund and Stock account type: after a total sell, 
trading account is cleaned from their contributions (unrealized capital 
gains become realized);
- multy-currency transactions capital gains contributions (realized and 
unrealized) always stay in trading account.

In my personal case, the multy-currency transaction capital gains 
contribution (limited in time and amount during holidays) is negligible, 
so the total of Trading account is circa the Unrealized Capital Gain in 
the Advanced Portfolio Report.

I can't split hairs anymore, and for the moment I'll give up.
I apologize in advance for any mistake in my post, but everything is at 
the level of my current limited knowledge.
I hope in more (than me) authoritative GC users replies.

Cheers, Alberto

On 23/12/2016 21:49, Stefan Söffing wrote:
> 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
>>>     
>>> <http://lists.gnucash.org/pipermail/gnucash-user/2013-May/049303.html>
>>>    * *Messages sorted by:* [ date ]
>>>     
>>> <http://lists.gnucash.org/pipermail/gnucash-user/2013-May/date.html#49316>
>>>      [ thread ]
>>>     
>>> <http://lists.gnucash.org/pipermail/gnucash-user/2013-May/thread.html#49316>
>>>      [ subject ]
>>>     
>>> <http://lists.gnucash.org/pipermail/gnucash-user/2013-May/subject.html#49316>
>>>      [ author ]
>>>     
>>> <http://lists.gnucash.org/pipermail/gnucash-user/2013-May/author.html#49316>
>>>
>>>
>>> ------------------------------------------------------------------------
>>> 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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