[GNC] Stock account type "child account" under Equity account type "parent account".

[David Cousens]

Jason,

Have a look at these articles on stock transactions for companies issuing
and buying back stock
(https://www.fool.com/knowledge-center/does-the-issuance-of-common-stock-increase-common.aspx,
https://www.cliffsnotes.com/study-guides/accounting/accounting-principles-ii/corporations/accounting-for-stock-transactions).
While these relate specifically to the US, the general principles in
treating such transactions will be similar, although the applicable
legislation may differ and you should get professional advice in your
jurisdiction on this. 

Your company, if it trades in its own stock  (this is illegal  in many/most
jurisdictions although individuals who run a company may own stock in the
company), would treat the stock it trades in as an asset. 
The issued stock is only ever valued at its issue price in equity, i.e. the
cash you receive in exchange for shares in the company. 

Stock options are also discussed here
https://study.com/academy/lesson/accounting-for-stock-options-equity-compensation-plans.html
or https://en.wikipedia.org/wiki/Stock_option_expensing. Again what is
presented here is a guide only. If your corporation legislation is different
it may differ in detail but it is unlikely the general methodology of the
treatment will be too much different.

Why would you need to do a stock split on the equity? You are not dealing
with a situation where you may have bought lots of stock at different times
and different prices and have to determine the capital gains applying to
each lot. This only applies if you are trading stock in other companies, not
to issued stock.

David Cousens



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David Cousens
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