[GNC] unrealized gain / losses for mutual funds

[David T.]

A couple of points here:

First, the analogy of a painting's unrealized gains to those of any other asset is perfectly valid. The only difference is that there is only one "share" of the painting, while there are many shares of a stock or mutual fund. Their change in value is going to be the unrealized gain or loss. The math for gain on a single item is simple, making the example perhaps easier to comprehend, at the risk of oversimplification the questions. 

Second, my (admittedly very basic) understanding of accounting is that unrealized gains, from an accounting perspective *don't exist.* You don't have the gains until you sell the asset. Gnucash applies this concept rather strictly. 

These points being said, there have been suggestions made in this list by others more qualified than I on the circumstances in which a user might need to track unrealized gains and account for them on an ongoing basis. I believe the term they used was "mark to market." You might look for those threads in the list archives. 

David T. 

On May 18, 2022 10:03:47 AM EDT, David Carlson <david.carlson.417 at gmail.com> wrote:
>Andrea,
>
>Perhaps your question is not clear if it wasn't answered by several replies
>hinting that accountants treat various types of assets differently. I am
>not an accountant,  so I  cannot know how well GnuCash treats the various
>types, but I would expect it to work reasonably well when currencies and
>publicly traded securities are tracked.
>
>GnuCash generally does not work very well tracking unrealized gains, as you
>have noted.  The documentation doesn't  either.
>
>If the documentation were improved to describe how GnuCash actually does
>work with other asset types than art objects,  such as currencies  and
>securities that are publically traded on Wall Street or the Chicago Board
>of Trade,  I would consider that a major step forward.
>
>On Wed, May 18, 2022, 1:33 AM Andrea Borgia <andrea at borgia.bo.it> wrote:
>
>> Any ideas? Was my question perhaps not sufficiently clear?
>>
>> Il giorno dom 15 mag 2022 alle ore 17:15 Andrea Borgia <
>> andrea at borgia.bo.it>
>> ha scritto:
>>
>> > Hello.
>> >
>> >
>> > Trying to improve my book-keeping, I would like to tackle this issue now
>> > so I went to the documentation, precisely "11.4.1. Unrealized Gains".
>> >
>> > Problem is, the example applies to a painting, that is an object whose
>> > value changes, not shares whose number remains constant but whose value
>> > changes, thus leading to a change in total valuation.
>> >
>> >
>> > Since the end goal is to derive unrealized P&L and then include those in
>> > the economic result for the year, I thought I could record a fake sale,
>> > after all at book opening the next year I do a fake purchase (with same
>> > price, just one day apart). If this makes sense, how do I compute the
>> > P&L given the new price? Must I do that manually with a split or is
>> > there some kind of assistance by GnuCash?
>> >
>> >
>> > Thanks,
>> >
>> > Andrea.
>> >
>> >
>> >
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