I'm trying to figure out how to account for a quarterly distribution
that I receive from an investment (call it "LP") that is converted into
new units. While that would be similar to a distribution reinvestment
(DRIP), the income is a return of capital not income.
I can't figure out how this is supposed to be done in Gnucash. While I
found parts of this transaction in tutorial and guide, I'm still confused.
So the way I understand things, this is what I should see in the first
quarter after 50 units of LP were purchased at $10/unit and total of
$500. Return of capital $40 that is reinvested in 4 units.
Initial purchase in first quarter:
[Asset:Investments:PrivateEquity:LP] $500
being 50 units at $10/unit
[Cash] -$500
Distribution amount $40 (Price still $10/unit) in second quarter.
After distribution there should be $540 in asset value of the units of
LP since there are now 54 units @ $10/unit. But the cost base of the
investment should be, I think, $500 ($500 initial investment - $40
return of capital + $40 return of capital reinvested in units).
Is this conceptually what is supposed to happen? If so, how do I get
Gnucash to show this? When I try to do the return of capital I end up
with the correct number of units but lower value and $40 income.
Is a reference to help me understand this please let me know where to
find it.
Thanks.
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