[GNC] Fwd: Double entry directly to Equity

[davidcousens49 at gmail.com]

Bogdan

That's easy. In the Accounts Tab, right click on the top level Equity account to
select it and then right click anywhere in the pane and select New Account from
the popup menu  or use Actions->New Account from the mainmenu. This should start
the dialogue with Equity as the parent account, enter the name "Revaluation
Reserve", select the account currency and add any other detail (opening balance
if non zero etc.) . At the bottom the Parent account should show as Equity. (You
can select any other Equity account as parent depending upon your heirarchy in
Equity). Click OK and you have an equity account which you can the use as the
other split in transactions recording the changes in asset value.

David


On Sun, 2022-05-08 at 10:37 +0200, Bogdan wrote:
> Well, actually my question is not an accounting question but rather a
> technical one on how to set up and use equity accounts in Gnucash, if at
> all possible (I'm a qualified accountant by the way). I took a revaluation
> reserve just as an example.
> 
> In many accounting frameworks you can find items that affect equity
> directly rather than through Profit and Loss / Retained Earnings.
> 
> For example, if you account for Property at fair value through P&L (so
> called "investment property") you would reflect an unrealized gain in
> market value as :
> 
> Dr Asset Cr Income (you equity increases because your net income / retained
> earnings increase)
> 
> However, if you use a revaluation model for the Property and mark it to
> market you would do:
> 
> Dr Asset Cr Reserve account
> 
> A Reserve account is an equity account (as much as Retained Earnings is an
> equity account). This gain doesn't go through P&L  and doesn't affect your
> income and expenses but it does increase your equity / capital directly
> through the reserve account (where it's reflected on the asset side - the
> property account or counter-account is beyond the point).
> 
> So I guess I am just wondering how to create an equity account in Gnucash.
> I used to set up these accounts as sub-accounts in the Trading account but
> now when I'm trying to make an entry directly to such a sub-account in
> Trading (e.g. Dr Asset Cr Trading) the Trading account changes to Imbalance
> automatically. Is there a workaround or is there a way to fix it?
> 
> Thanks!
> 
> On Sun, May 8, 2022 at 2:39 AM Michael or Penny Novack <
> stepbystepfarm at comcast.net> wrote:
> 
> > > This Investopedia page (
> > > 
> > https://www.investopedia.com/terms/r/revaluationreserves.asp#:~:text=Revaluation%20reserve%20is%20an%20accounting,of%20the%20asset%20has%20changed
> > > .) might provide some insights into how to setup revaluation reserves. My
> > > reading of this is that the Reserve account is a contra account to the
> > asset
> > > value and it is recorded against a specific Expense account to account
> > for short
> > > term variations in the asset value.  Find the section on recording
> > revaluation
> > > reserves a bit down the page.  Most jurisdictions don't tax unrealized
> > gains or
> > > give you exemptions for unrealized losses, so you would likely want to
> > record it
> > > under an Expense account category for non-deductible expenses.
> > > 
> > > You should seek specific accounting advice from a qualified accountant
> > for your
> > > jurisdiction and specific situation and not rely on this
> > > 
> > > David Cousens
> > 
> > Listen to David.
> > 
> > This is a house. Ordinary expenses fore most repairs are non-deductible.
> > But certain "improvements", while also non-deductible at the time, are
> > allowed to be added to the basis, and so can reduce capital gains
> > when/if the house is sold << and you might not be required to report
> > these gains if buying another house for more within a certain amount of
> > time >> BUT (and this is why I am not being more specific, though I know
> > some of the details) I am NOT "qualified" to give such advice. Seek a
> > qualified professional.
> > 
> > Michael D Novack
> > 
> > 
> > 
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