[GNC] Trial Balance Issue with Fund Merger

[Lisa Rowell]

On 9/1/2021 5:27 AM, Lisa Rowell wrote:
>
> On 8/31/2021 9:41 PM, John Ralls wrote:
>>
>>> On Aug 31, 2021, at 8:32 PM, Lisa Rowell <lisa.gives.in at gmail.com> 
>>> wrote:
>>>
>>> I'm working my way through my account history after a massive 
>>> GnuCash import, straightening out issues with missing realized 
>>> capital gains/losses and came across an event that I can't figure 
>>> out how to properly handle.
>>>
>>> I held shares of a fund called Spartan 500 Index Investor Class 
>>> (FSMKX) which merged with Spartan US Equity Index Investor Class 
>>> (FUSEX) at some odd rate around 1:0.513. When I did the import, I 
>>> ended up with an account for FSMKX and an account for FUSEX and a 
>>> manually entered exchange transaction which did a sell of FSMKX 
>>> shares and a buy of FUSEX shares with no share price. This got 
>>> everything balanced out as far as share counts go, but now I'm 
>>> finding it's showing up as being not correct in the Trial Balance. 
>>> It looks to me like the exchange is being interpreted as if an 
>>> actual sell event had taken place.
>>>
>>> Can GnuCash properly account for this? The case in the manual's More 
>>> Complex Merger example is a bit different because the example stock 
>>> continued to trade under the same symbol, so that solution doesn't 
>>> map well. I found a past mailing list thread that said that the 
>>> proper way to account for this is as a sell transaction of the going 
>>> away fund and a buy transaction of the fund that lives on with an 
>>> accompanying Realized Gain transaction. This doesn't seem right to 
>>> me though since I didn't sell the shares and did not realize a gain 
>>> and I don't even have prices for the time of the merger. In my way 
>>> of looking at it, the gain calculation should come at the time of 
>>> sale and be based on purchase price of the various share amounts, 
>>> and not at the time of the merger, since that maps to the tax view 
>>> of things where I live.
>>>
>>> I understand that GnuCash wouldn't be able to calculate the realized 
>>> gains post merger, and I'm ok with doing that in a side spreadsheet, 
>>> but am more looking for a way around the bogus realized gain entry 
>>> at the time of merger just to make the Trial Balance happy.
>> If you're not too compulsive and since this is presumably ancient 
>> history in a personal book one simple way to deal with it would be to 
>> pretend that you bought the FUSEX in the first place and ignore the 
>> FSMKX, but that might be a little painful if you have a bunch of 
>> reinvested FSMKX dividend transactions that you'd also need to change.
>>
>> I've handled similar situations in the past by doing a simple 
>> transfer transaction between the two accounts, as in CR FSMKX 513 and 
>> DR FUSEX 1000. As long as there's no currency component to the 
>> transaction it shouldn't create a trading imbalance in the book 
>> currency.
>>
>> Regards,
>> John Ralls
>
> That solution was what worked for me for share transfers between 
> brokerages, where the commodity was the same, but when I changed 
> commodities it somehow shows up as a mismatch in the Trial Balance. I 
> don't have a share price for the shares in either split so, in theory 
> it shouldn't involve the book currency at all. I don't get it at all.
>
> I'm sure it's this transaction since the balances match on the 
> previous day and the only other transaction on this date is a paycheck 
> deposit in the book currency that's no where near the amount of the 
> imbalance. The transaction is in the image attached, that's what 
> you're advocating, right?
>
> Thanks.
>
> Lisa R.
>
Additional information:

Removing the cross commodity sell/buy transaction does remove the Trial 
Balance discrepancy. Additionally I added up all of the purchase prices 
of shares of the fund being merged away and that amount does equal to 
the credit / debit difference in the report.

Lisa Rowell