[GNC] Should i care about Unrealized Losses/Gain in Balance Sheet ?

[David Cousens]

Long,

Unrealized gains or losses are created when the price of an asset you hold ,
i.e. gold, shares etc, varies on the open market. They are unrealized
because unless you sell the asset you haven't made an actual gain or loss.
Investors and businesses generally want to track the value of items they
have invested in so that they can buy and sell their assets when they can
make a profit on them or at a minimum minimize their losses.

They are tracked and reported separately from actual gains and losses
because most tax autorities do not tax you on unrealized gains and losses
only when you actually sell the assets do they become realized gains and
losses and at this point the gain or loss usually becomes taxable. You can
create separate income sub accounts for Taxable and Non Taxable income if
you wish. The Unrealized Gains and Losses account would thern be a
subaccount of Income:Non Taxable while the  would be a sub account of the
Income:Taxable subaccount and when you make the sale after having recorded
the gain or loss at the sale price you would create a transaction to
transfer the balance of the Unrealized Gains and Losses account to the
Realized Gains and Losses which will then be assessable for tax when you
file it. You are not normally required to report Unrealized Gains and Losses
to a tax authority in most countries/jurisdictions (there are some where you
are -so check this with your local accountant)

If you are holding 100gms of gold for example and the price yesterday was
$53.53/gm and today the price is $54.13/g you have had an unrealized gain of
$60.00. When this happens you would record a transaction as follows:

                                                                 Debit      
Credit          
Asset:Gold                                                    60
Income:Unrealized Gains and Losses:Gold                       60

If tomorrow the price drops to $52.93/gm you will have overnight made an
unrealized loss of $120 and you would record this as:

                                                                 Debit      
Credit          
Asset:Gold                                                                  
120
Income:Unrealized Gains and Losses:Gold       120   

and the Balance of the Income:UnrealizedGains and Losses:Gold will have
decresed by $60 from what it was two days ago.  This balance will tell you
whether you have made or lost money by holding the gold since you bought it.

Not sure why your question got hijacked. Sometimes because in an answer
someone else finds a point and instead of starting a new topic just jumps on
the existing topic.  

Others may be expressing displeasure that you are off subject for the User
forum because the purpose of the forum is not to teach you about accounting
but how to use GnuCash to do the accounting which makes life difficult when
you are learning both at the same time. Wikipedia has a fairly good
treatment of accounting and usually fairly clear explanations of the terms
so try looking up any accounting knowledge/terms there first.

David

David



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David Cousens
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