Unrealized Gains (Again)

[John Ralls]

> On Mar 6, 2017, at 12:09 PM, David Carlson <david.carlson.417 at gmail.com> wrote:
> 
> Hi,
> 
> I am trying to track down errors in the unrealized gain in an IRA mutual
> fund that I have owned since 2005.
> 
> It starts out with a purchase of 1,373.848 shares for a total of $20,081.54
> at $14.62 per share.  This generates a $4.72 (0.02%)discrepancy right off
> the bat, as those shares have a value of $20, 085.66.  Then as dividends
> are reinvested, more errors accrue, sometimes averaging out, sometimes
> not.
> 
> I am using average cost for sales, calculated in a separate spreadsheet to
> determine the realized gain for sales.  The broker did not then and still
> does not report realized gains in this IRA.
> 
> After all transactions are entered with realized gains matching the
> spreadsheet, I am left with an error of $4.13 in the unrealized gain on
> December 31, 2016 when comparing a balance sheet report to the
> spreadsheet.  I have the spreadsheet set to show average costs to four
> decimal places, which I round off in the realized gain entries in GnuCash.
> 
> My question is do I have to live with errors of several dollars in
> unrealized gains in large value holdings when the percentage is reasonable
> for  1/1000 share resolution?
> 
> Or is there some way to reduce the apparent errors?

There is a way to prevent the errors: Don't enter the price, enter the value. Your actual price in that original buy was 14.617/share.

Remember that GnuCash saves the amount (i.e. the number of shares) and the value (the total currency paid or received for the shares). When you enter a two-commodity transaction GnuCash makes sure that amount * price = value, and if you enter two of them GnuCash will compute the third, if you enter all three and the result isn't right GnuCash will ask you what to adjust. You *always* want GnuCash to compute the price. Always. That's because if you feed it a rounded price you get an inexact result 
in either amount or value, and that's what gets stored. If you give it the exact amount and value then it might display a rounded price, but the stored amount and value are correct and GnuCash will always recalculate the price and maybe round it for display so there's no error.

Regards,
John Ralls