On Sun, 05 Mar 2000 23:55:38 EST, the world broke into rejoicing as
Buddha Buck <[EMAIL PROTECTED]> said:
> >
> > I have been trying to figure out how to use Gnucash to track
> > realized gains calculations on stock trades, but I don't quite
> > understand it. Can someone give me a few hints on this? I've
> > tried reading all of the documentation, but I'm still missing
> > something.
>
> I don't know how GnuCash handles it, but I -think- I've figured out how
> to do it from a traditional accounting standpoint...
You've hit it spot-on...
> > My guesses are:
> >
> > - Changing the price of a stock requires a transfer of money from
> > another account. This doesn't seem right because it doesn't
> > differentiate between realized gain and unrealized gain.
>
> More importantly, stocks are not money. If anything, they should be
> treated as inventory.
That's been discussed before, and that is the analogy that has been
drawn.
> > - Selling a stock is recorded as a split. $50 is transferred into
> > the brokerage account, $30 is transferred from the stock account,
> > and $20 is transferred from the realized gain account. This doesn't
> > sound right because it doesn't take into account the price changes.
>
> I think this is the closest...
>
> Let's deal with both the buying and selling transactions...
>
> I'm going to assume the following:
>
> A brokerage account "Broker", configured as if it were a bank account.
> An income account "Capital Gains"
> An asset account "Stock Holdings (at cost)"
>
> Buying 1 share of stock at $30 would be recorded as:
>
> Stock Holdings (at cost) $30
> Broker $30
>
> Selling that share of stock at $50 would be recorded as:
>
> Broker $50
> Stock Holdings (at cost) $30
> Capital Gains $20
>
> Then everything balances: your accounting books properly reflect your
> costs, as well as your gains when realised. A more complicated setup
> could easily have several stock holding accounts (say, short term and
> long term stocks), and many capital gains accounts (short term, long
> term, non-taxable, etc).
Indeed. The tracking that GnuCash does is "at cost;" the only thing
that is really tracked is the set of transactions, and those are the
costs.
> > - A combination of the two is used. Changing a stock price draws
> > $20 from an "unrealized gain" account. Selling a stock transfers
> > $20 from the "unrealized gain" account into a "realized gain"
> > account. Is this close?
That's pretty accurate. Although what you're missing is that Quicken
isn't actually creating a *transaction* to reflect the unrealized
gains/losses...
> > - Another option is that I'm completely wrong on all of this and I
> > haven't got a clue how it's handled.
> >
> > If Gnucash can handle this, then I am interested in learning how to
> > use it. If Gnucash does not yet handle this information, then I am
> > interested in helping to implement it. Quicken handles this, except
> > it's all done as magic to the user. There doesn't seem to be a way
> > to choose where quicken gets this profit from. With Quicken, all
> > profit comes from a single account. It is difficult to separate
> > profit into different accounts for things like tracking taxable
> > income and non-taxable income.
> >
> > Any thoughts?
The "magic" that is being observed is that what Quicken does is to
provide a set of reports that can use other values than "cost," and
which thereby will compute values for "unrealized" gains.
The critical point is that GnuCash is not set up to formally track
unrealized gains. I really don't think it *should;* that is indeed
something properly provided by reports.
In effect, what needs to take place is for there to be some
stock-oriented reports.
Another thread will touch on budgeting/scheduled transactions, which
provide something similar to the "realized versus unrealized"
dichotomy...
--
"... the most important thing in the programming language is the name. A
language will not succeed without a good name. I have recently invented a
very good name and now I am looking for a suitable language.
-- D. E. Knuth, 1967
[EMAIL PROTECTED] - <http://www.ntlug.org/~cbbrowne/lsf.html>
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