A newbie Q - Buying back liability at a discount

[Suresh Bazaj]

Hello Buddha (The wise one :),

	Thanks for the quick response. Though I get confused (just as Lewis)
with the traditional accounting terminology,	fortunately the default
column labels in GNUcash are Increase & Decrease. So, I avoid the whole
credit/debit terminology.

	I entered it as a split transaction in the Liability account:
-	The first entry decreases the liability by the full $1,500
-	The second entry is for $1,300 increase in ST Capital Gain
-	The third entry is for $200 in the checking account. It shows as
increase in the Liability account and as decease in the checking account.

	I don't really understand the meaning of $200 shown as increase in
the Liability account, but as long it shows correctly in the checking
account, I am happy :).

Best,

Suresh 
	
-----Original Message-----
From: gnucash-user
[mailto:gnucash-user-bounces+suresh=bazaj.org at gnucash.org] On Behalf Of
Lewis Balentine
Sent: Tuesday, May 10, 2016 2:16 PM
To: gnucash-user at gnucash.org
Subject: Re: A newbie Q - Buying back liability at a discount

 >> You would (using traditional accounting labels) credit Checking by $200,
credit ST Capital Gain income by $1300, and debit the Liability by $1500. <<

...  debit Checking by $200 ??

On 05/10/2016 04:03 PM, Buddha Buck wrote:
> On Tue, May 10, 2016 at 4:33 PM Suresh Bazaj <suresh at bazaj.org> wrote:
>
>> Hello,
>> 1.     At the beginning of year, there is a $1,500 Liability entry for a
>> PUT
>> sold for $1,500 in prior year. There is a corresponding entry for 
>> $1,500 in the Checking account where the $1,500 was deposited.
>>
>>
>>
>> 2.     I bought back the PUT for $200 in March, thereby getting rid of
the
>> Liability for a net profit of $1,300 (ST Capital Gain).
>>
>>
>>
>> 3.     I enter the $200 in the Checking account as a decrease. What do I
>> enter in the Transfer column, such that the Liability is zeroed and 
>> the
>> $1,300 shows up as ST Capital Gain income?
>>
> I am unfamiliar with the mechanics of buying and selling options. I 
> trust your explanation of what your CPA says is accurate, and am 
> answering as if it were.
>
>
>> Is this an example of some type of split Transaction?
>>
> Yes. You would (using traditional accounting labels) credit Checking 
> by $200, credit ST Capital Gain income by $1300, and debit the 
> Liability by $1500. This would be done as a split transaction.
>
>
>
>>
>>
>> Thanks,
>>
>>
>>
>> Suresh
>>
>>
>>
>> _______________________________________________
>> gnucash-user mailing list
>> gnucash-user at gnucash.org
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>>
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.

_______________________________________________
gnucash-user mailing list
gnucash-user at gnucash.org
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.