On 13 Feb 2000 16:49:36 CST, the world broke into rejoicing as
John Hasler <[EMAIL PROTECTED]> said:
> Herbert Thoma writes:
> > That's a point. It would mean to treat stock like a tradesman treats
> > commodities.
>
> Sort of. Inventory valuation is as complex as depreciation.
Um. I don't think it's *quite* as complex. More anon...
> > But then the price must remain the purchase price.
>
> The tradesman doesn't always value his inventory at cost. Then there's
> LIFO & FIFO...
Yup.
And this is actually a fairly good perspective from which to view the
treatment of gains on stock.
Stock is a lot like "inventory." It may be argued with legitimacy
that gains are not real until the *sale* actually takes place.
> > On sale this value gets transfered to a bank acoount and any profit/loss
> > comes from an income/expense account.
>
> This the correct way to do it in the US for tax purposes.
Indeed.
> > This may be the 'correct' accounting solution, but it would prevent stock
> > price tracking, right?
>
> If that's all you do, it does make it difficult to produce realistic
> reports. Perhaps you could keep track of the difference between cost and
> current market value in an auxiliary account and arrange to be able to
> generate reports either with or without it. This would be keeping two sets
> of books which is illegal in the US for corporations but not, I think, for
> individuals.
Here's the "anon."
I *thought* multiple sets of books were illegal. Until I did
conversions of assets from "old system" to "new system" for AMR. For
depreciation, they had not one set of books for this purpose, not two,
but *eight.* Suffice it to say that there are a whole bunch of tax
policies out there for the treatment of depreciation, and they were
required to track 8 different ways of calculating depreciation having
to do with the major legal jurisdictions in which they operate, and
Alternative Minimum Tax policies within those jurisdictions.
All of the above was not exactly what you'd think of as "having
multiple sets of books" (even though that is *exactly* the terminology
in use); it is more like having multiple views on the same data.
The government would not be happy to find that distinct/independent
sets of books are being kept, but there's not necessarily any problem
with looking at the *same* data under varying sets of valuation rules.
--
Roses are red
Violets are blue
Some poems rhyme
But this one doesn't.
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