On Sun, 02 Jul 2000, Christopher Browne wrote:
> Buddha Buck <[EMAIL PROTECTED]> said:
> > After a 2:1 stock split, I
> > can simply change the recorded price to "200 MSFT = $5010" and the
> > number of shares bought to 200, and accounting wise, everything works
> > out OK -- including the cost basis of the shares for capital gains
> > purposes.
>
> I like that property.
Unfortunately it is an abstraction that MAY be useful but does not track the
documented transactions.
I have a document that says that I bought 100 "old shares" and paid $5010 for
them.
I have another document that says that MSFT exchanged my 100 "old shares" for
200 "new shares". I no longer have any "old shares".
Accountants are "big" on tracking "what happened" rather than the engineering
approach of "what effect" did it have.
I think that the proper representation is to have multiple accounts that
represent the single investment.
Thus I have "Investment in MSFT" which has two subaccounts "Shares circa
1998" and "Shares circa 2000"
In general, I would suppress the detail and simply report the "Investment"
rather than the details.
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