How to create an asset with a reduced value compared to my regular currency (dollars)

Thu Dec 7 17:19:41 EST 2017

I have to concur on the $70 gift idea.

You paid $430 for a stored value card that has $500 on it.

This is no different than if you handed a bank teller $430 in small bills and they returned to you 5 one hundred dollar bills. (assuming the bank is just fine with that)

When you spend $100 from this card you aren’t really spending $86. You’re spending $100.

After you’ve spent $430, the next $70 on the card is a gift to you from whomever sold you the card.

But you can’t truly determine which $70 is gift and which isn’t.

The easiest and likely most correct transaction is this:

Dr. Assets:Cash $430
Dr. Income:Gift Received $70
Cr. Assets:Prepaid Card $500

When you use the card, all transactions are just normal as if you’d paid $500 for it.

There is no discount. There is no rebate. You received a ‘gift’ of $70 in the form of extra stored value on the card.

Had you paid nothing and received a card with a $70 value, the transaction would be:

Dr. Income:Gift Received $70
Cr. Assets:Prepaid Card $70

Note, the difference is NOT the $70. The difference is what you paid for the extra value, in this case $430.

Had you paid $430 for one card and the merchant gave you a separate card with $70 value on it (that’s two cards totaling $500) then your entries would be this:

Dr. Assets:Cash $430
Cr. Assets:Prepaid Card $430

Dr. Income:Gift Received $70
Cr. Assets:Prepaid Card $70

There’s no fundamental difference in these two separate transactions than the combined transaction above. They record the same net amounts in the same places. The fact that all of this takes place on one card instead of two, or that the gift is from a merchant instead of a family member or friend does not change the nature of the transaction.

You can record anything you want the way you want if this is just for you to keep track of, but the goal should always be to use transactions to show an accurate picture of what happened. What happened is NOT that you saved money on future purchases. What happened is you received a gift of $70 in the form of a stored value card.

But by all means, ask a CPA if it’s that important to you.

Regards,
Adrien

> On Dec 7, 2017, at 3:46 PM, nvsoar <nvsoar at charter.net> wrote:
> 
> On 12/06/17 12:44, adrian wrote:
>> Tommy Trussell wrote
>>>> Adrian:
>>>> In the case at hand I spent $430 on the gift card and when I buy
>>>> something
>>>> that costs $100, I'm really only spending $86.  That's what makes sense
>>>> to
>>>> me for how this ought to be counted.   Since I don't know the category of
>>>> the expense in advance, I can't just put in a $70 offset unless I put it
>>>> as
>>>> "misc", in which case I lose track of some information about how I
>>>> allocated
>>>> my money.
>>>> 
>>> I went back to your original question (remember that this is NOT a forum
>>> --
>>> it's an email list that you're viewing through Nabble)
>> Yeah, despite that I have been unable to actually subscribe to the list.
>> But your point was you wanted more context, I suppose.
>> 
>> 
>>>> I bought a $500 gift card for $430 this week.  I would like to add this to
>>>> gnucash as some kind of asset so that as I spend it, the correctly scaled
>>>> amount gets transferred to the expense account I use.  In other words, if
>>>> I
>>>> spend $100 from this account it's really only $86.
>>>> 
>>>> I tried to do this by creating a security fund and then using the price
>>>> editor to set the price to 0.86.  But when I insert a transaction from
>>>> the
>>>> new account to an expense account, it doesn't apply the 0.86 factor.
>>>> What
>>>> is the right way to do what I want to do?
>>> 
>>> I think you have demonstrated the difficulty with what you're trying to
>>> do-- you're trying to make a rebate card a different KIND of currency,
>>> which in one sense, it is. HOWEVER every time you make a purchase from
>>> that
>>> card it will require a currency exchange, which adds a level of complexity
>>> and may not produce the result you want.
>>> 
>>> I'm sure you could make it work, but in the end, it's a lot easier to just
>>> offset the $70 against the expenses. TECHNICALLY you don't get benefit of
>>> the full amount you spent on the card until you have completely depleted
>>> the value of the card, but that would be a PITA (sorry for the acronym --
>>> I
>>> mean "difficult").
>>> 
>>> I think the real answer is to go back and think about what it is you want
>>> to achieve.
>> I'm not sure what exactly is unclear.  I am thinking of the acquisition of
>> this card not as a purchase, but as a shift of assets from one form to
>> another.  So instead of $430 in the bank I now have a different asset,
>> namely $500 on the card.   Yes, it's true, I don't benefit until I spend the
>> money.  But the same is true of money in the bank.
>> 
>> But it's not really $500 on the card because I only spent $430 on it.  It is
>> exactly like a currency exchange, though it's not obvious to me why this
>> means my goal is a very complex one.   It seems pretty simple to have an
>> exchange rate and have the card denominated in some currency, say the Gifta,
>> that is equal to .86 dollars.  When I buy something using the card I can go
>> to the card's account and list the expenses in Giftas and they will be
>> automatically translated by the 0.86 factor.   (I assume that if I made an
>> account denominated in, say GBP, that I would be able to get that to
>> translate to the USD that I use for my regular accounts; after all, this is
>> something that is important to many people.)
>> 
>> Now actually I realized that the solution I was fiddling with can be made to
>> work. As I mentioned before, I made an account and created a security and
>> tried to set its price using the price editor.  For some reason the Price
>> Editor doesn't seem to do anything, but there is a column labeled "Price" in
>> the account I made, and if I set this to 0.86 (which I have to do manually
>> for every transaction, it seems) then things work as I was hoping.  (And I
>> notice that prices I enter in the ledger appear in the price editor even
>> though the reverse doesn't seem to be the case.)   It would be even nicer if
>> I could set the price once and have that same price stay in effect until I
>> change it, rather than having to enter it again for each transaction with
>> the default price being "1".
>> 
>> Why do I care?  It's just so that my accounting correctly tracks my
>> expenditures in different categories.   I don't need to use accounting
>> software to do price comparisons, but if I want to know how much I spent on
>> Widgets this year---and I buy some using the card---the number will be
>> inflated if I don't account for the discount.
>> 
>> 
>> 
>> 
>> 
>> --
>> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
> Hmmmm.  Seems to me that you received a $70.00 gift along with the card.
> nvsoar
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