[GNC] Trial Balance Issue with Fund Merger

Lisa Rowell lisa.gives.in at gmail.com
Wed Sep 1 19:59:20 EDT 2021


Simple enough in my case. Thanks.

Lisa R

On 9/1/2021 3:54 PM, David Carlson wrote:
> If the price in the price database is wrong for a particular day it 
> can be manually corrected in the price database tool If there are not 
> too many errors to deal with.  I run into that when manually entering 
> transactions
>
> On Wed, Sep 1, 2021 at 4:50 PM Lisa Rowell <lisa.gives.in at gmail.com 
> <mailto:lisa.gives.in at gmail.com>> wrote:
>
>
>     On 9/1/2021 12:28 PM, John Ralls wrote:
>     >
>     >> On Sep 1, 2021, at 12:16 PM, John Ralls <jralls at ceridwen.us
>     <mailto:jralls at ceridwen.us>> wrote:
>     >>
>     >>
>     >>
>     >>> On Sep 1, 2021, at 11:15 AM, Lisa Rowell
>     <lisa.gives.in at gmail.com <mailto:lisa.gives.in at gmail.com>> wrote:
>     >>>
>     >>>
>     >>> 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 <mailto: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.
>     >>>
>     >> It is, but that doesn't quite work. Here's a sample that does:
>     >> If you don't price the share transfer to the currency (USD in
>     both examples) the trial balance logic assumes 0 and calculates a
>     loss. To avoid that enter the book value of the shares you're
>     transferring as a sell (credit) amount in the source split and a
>     buy (debit) amount in the destination split:
>     >>
>     > Unfortunately my screen shot didn't make it to the list. It
>     contained the following transactions:
>     >
>     > 1/23/19   Buy PIODX 1000          Brokerage Account 1000       
>      25.0000    25,000.00                 1,000
>     > 2/28/19   Reinv PIODX 11.231      Brokerage Account 11.231   
>      22.2598       250.00                 1,011.231
>     > 9/1/21    Transfer to PXXXX  -1011.231                         
>       1,011.231         0
>     >                                    PXXXX 1971.211     12.8094   
>     25,250.00
>     >                                    PIODX  -1011.231     24.9698 
>                  25,250.00
>     >
>     > The last transaction is in split view showing the identical cash
>     amounts for the two stock accounts. Enter the amounts and let
>     GnuCash compute the prices to prevent rounding errors from causing
>     a gain/loss.
>     >
>     > Regards,
>     > John Ralls
>
>     I got the image in email, and it cleared things up for me. It
>     looks to
>     me like you put in the sell book currency amount as not the value
>     on the
>     date of the merger, but rather the basis for the shares being
>     converted,
>     thus making the it look like there is no gain/loss being realized. I
>     suspect this simplifies dealing with gains/loss calculation on the
>     post
>     merger shares as well.
>
>     The one issue I see with this as a solution is that it creates
>     incorrect
>     prices in the price database, which I assume would mess up a Network
>     Report. I'm not sure this bothers me in this case.
>
>     Thanks for getting me back on track, it's greatly appreciated.
>
>     Lisa R.
>
>
>     >
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>
> -- 
> David Carlson


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