Chapter 8 - investment accounts

Wed Nov 16 13:13:27 EST 2016



    I would like to have all of the detail and accurate balances in the security accounts and correct lot matching.
I have not read Chris' message on a computer screen where I can see complete lines and fully digest his message, but I think that he is suggesting a work-around that almost gets there.
If his final adjustment to each transaction put the correct values back to each account and collected the "errors" in one or more 'bogus' account(s) , would that work?
David C
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------ Original message------From: John RallsDate: Wed, Nov 16, 2016 8:54 AMTo: Chris Good;Cc: GnuCash User Mailing List;Subject:Re: Chapter 8 - investment accounts
> On Nov 15, 2016, at 9:07 PM, Chris Good  wrote:> > Re:> http://gnucash.1415818.n4.nabble.com/Chapter-8-investment-accounts-tc4665181> .html#none :> >> Sep 09, 2015; 7:19am Alton Brantley >> One problem with the View Lots screen is that it does not adjust the> capital gains or loss for the commissions, thereby overstating a gain or> understating a loss. >> >> I work around this by tracking lots as you did, then, at the end, I add an> adjustment in the Realized Gain/Loss transaction to credit the gain/loss> with the sum of the commissions. >> >> Example: >> >> 1. Buy 100 shares XYZ at 50 >> > ________________________Shares_________Price__________BUY/Debit_______SELL/C> redit__ >> Stock:XYZ                100.          50.            500.00 >> Investment Expense                                     50.00 >> Bank:Cash                                                            > 550.00 >> >> 2. Sell 100 shares of XYZ at 55 >> > ________________________Shares_________Price__________BUY/Debit_______SELL/C> redit__ >> Stock:XYZ               -100.          55.00                        >  550.00 >> Investment Expense                                     50.00 >> Bank:Cash                                             500.00 >> >> Upon matching up lots, a Realized Gain/Loss transaction appears in the> stock Ledger >> > ________________________Shares_________Price__________BUY/Debit_______SELL/C> redit__ >> Stock:XYZ                                              50.00 >> Investment Gains                                                      > 50.00 >> >> This would show that you gained $50. In fact, you paid $550, received> $500, so you LOST $50. How do you account for that? >> You add as an expense offset the sum of the Investment Expenses and adjust> to Investment Gains/Losses to balance. >> >> > ________________________Shares_________Price__________BUY/Debit_______SELL/C> redit__ >> Stock:XYZ                                               50.00            >                  <-These two splits are the above transaction >> Investment Gains                                                      > 50.00               <- >> Investment Gains                                       100.00            >                  <-These two splits added to above transaction >> Investment Expense                                                  >  100.00               <- >> >> >> Now, when you look at your Investment Gains/Losses, you will see that you> gained $50 in stock price but gave back $100 in commissions, yielding a net> cap loss of $50 > > Following my documentation of using lots for calculating investment capital> gains, I want to add something about commission as per above.> However, I don't think the last split (crediting Investment Expense 100.00)> is the correct account. If you use Investment Expense (commission), the net> commission for this stock holding is zero.> Can some-one with more accounting qualifications than I please suggest a> name and account type for this last split?> > Or is doing it this way not the way it should be done...> I can imagine the argument that if you are going to include commission in> capital gains calculations, then you should enter the net price (including> commission), and not record commission as its own split, regardless of this> adding an misleading price into the price database. You could just add the> commission as part of the transaction description if you wish to track it.I include commissions and fees in the buy and sell splits because it makes the gain/loss calculations much easier. True, the price won't match what the exchange reports, but it's the effective price I paid and immediately reflects the unrealized loss caused by having paid those commissions and fees. That approach works only because commissions and fees are deductible in US tax law. People who live in jurisdictions where they're not deductible will have to break them out so that they have the right numbers to report to their tax authorities, and some people in jurisdictions where they are deductible like to break them out so that the detail is visible or so they can see how much their full-service broker is eating out of their investment returns. They'll have to calculate gains and losses manually because the lots facility doesn't know to deduct the commissions and fees from the gains. Regards,John Ralls_______________________________________________gnucash-user mailing listgnucash-user at gnucash.orghttps://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.