[GNC] Cashflow-like report to show realized and unrealized gains / balance sheet delta report

[Adrien Monteleone]

If the gain is unrealized, then the account balance has not changed.

If you physically (or in a bank account) have USD 1000 at the beginning of the year because you traded EUR 1000 at a 1:1 rate, and at the end of the year, have not done anything with that USD 1000, you still only have USD 1000.

GnuCash might value this at EUR 2000 for the purpose of balancing your books, but what you actually hold has not changed. Your bank isn’t going to report that you now have EUR 2000 instead of USD 1000.

Now, if you trade that USD 1000 back to EUR at the new rate, then and only then will you really have EUR 2000 - a realized gain.

If you are using multiple currencies properly, the USD account should reflect USD 1000, not EUR 2000.

If you want to see why the GnuCash balance sheet might reflect a valuation change on a currency or commodity, turn on Trading Accounts, select them in the report options and also choose the option to show exchange rates.

If you look at the exchange rates for the end of last year balance sheet and new balance sheet, they difference will reflect the value assigned to the ’Trading Gain/Loss’ line.

Keep in mind, except for very special circumstances, for most people, ‘unrealized gains’ are simply a ‘what if’ level of thinking. They do not belong in your books. Only actual realized gains are reflected there. (even being required to ‘mark to market’ would be handled by a transaction to realize any gain/loss)

Regards,
Adrien

> On Feb 27, 2019, at 4:18 AM, Chary Chary <chary314 at gmail.com> wrote:
> 
> Christopher,
> 
> thanks.
> 
> But I must say, I still have a sneaky feeling, that I may be missing
> something, because I just don't understand how people who deal with several
> currencies and who have stock can possibly live without such report, which
> would show unrealized gains.
> 
> Without report with unrealized gains you have a situation, that you have
> some balance at the beginning, balance at the end, but you have no report,
> which would show how you got from balance at the beginning to balance at
> the end. Even though all your individual transactions are balanced, if you
> add them all together they will not produce a delta between balance sheets,
> in case you deal with  more then one currency or have stock / gold
> (anything).
> 
> In a very simple situation:
> 
> Say I want to report in EUR, but I keep money in USD. Say I have 1000 USD
> and exchange rate was 1:1 at the beginning.
> So, starting balance sheet will say, that I have 1000 EUR
> Then exchange rate changed and now 1 USD costs 2 EUR. So, all of a sudden
> balance sheet at the closing will show, that I now have 2000 EUR.
> But how did happen?
> I would then expect some line, saying something like: "unrealized gain due
> to USD/EUR" exchange rate changes"  - 1000 EURO.
> 
> The same applies to stock changes.
> 
> Am I talking some nonsense? How do people manage their finance without such
> analysis in our modern world?