[GNC] Bad account setup in Guide §12; was: Should i create "Equity Account" for each currency I had ?

[David Cousens]

Frank 

In that case you should be concerned as the trading account balances are
currently reported under equity in the Balance sheet.

The attached is a Balance sheet run on a dummy book I created
Trading_Test_BalSheet.png
<http://gnucash.1415818.n4.nabble.com/file/t375329/Trading_Test_BalSheet.png>  

The dummy book is attached as well
Test_trading.gnucash
<http://gnucash.1415818.n4.nabble.com/file/t375329/Test_trading.gnucash>  

The amount shown under Equity as trading losses is the sum of the balances
of the trading accounts in AUD and USD expressed as AUD after a couple of
dummy transfers from AUD->USD->AUD and USD_>AUD->USD with changes in the
exchange rate between them. 

The IFRS and FASB both require trading gains/losses where trading is the
main operation of the entity to be reported as Other Comprehensive Income
whereas incidental trading  gains and losses where they are not main
activity of the business are normally reported through normal profit and
loss. The situation is different for companies and for individuals at least
in Australia as individual's capital gains are taxed here at an individuals
marginal tax rate (variable stepped scale depending on assessabletaxable
income) whereas capital gains in companies are taxed at the company tax
rate.

The IFRS is like most standards/legislation difficult to make sense of
unless you have a glossary and the inital definitions etc all open at once.
The Australia standards pretty well follow the IFRS but there will be some
excpetions and the FASB is trying to converge on the IFRS and has apparently
in this area. From what I can gather the HGB is also IFRS based but the
question is how closely. Iy seems in most cases there are situations where
it is reported in income and others where it is reported in equity. I will
start sorting through the legisaltion and see if I can tabulate the
requirements in a few major jurisdictions cf the IFRS requirements. Might
take a while to do.  I can track down the Australian situation for companies
fairly easily as my daughter is a company accountant and handles reporting
on it all the time.

I seem to remember a lot of discussion fairly recently in the last couple of
years when Chris was updating various reports in either the Dev or User
forums. I'll track that down to see what light it sheds on the situation.

David



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David Cousens
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