[GNC] Fwd: Double entry directly to Equity

Bogdan sinovij at gmail.com
Sun May 8 06:20:21 EDT 2022


Thanks, that answers my question!

On Sun, May 8, 2022 at 12:03 PM <davidcousens49 at gmail.com> wrote:

> 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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