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 < [email protected]> 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 > > > > _______________________________________________ > gnucash-user mailing list > [email protected] > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list [email protected] To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
