Great find. Breaks all financial transactions into a series of templates to be followed. I'll definitely use that book as a reference going forward.
In regards to the current conversation, here's the relevant quote. Stock Cost = (Shares Purchased × Price Per Share) + Commissions + Other Transaction Fees Notice that the commission is capitalized, not expensed. That's clearly where we have been going wrong. Rick Sent from my iPhone > On Jun 27, 2014, at 7:25 AM, Bruce Schultz <[email protected]> wrote: > >> On 25 June 2014 3:08:19 PM AEST, Rick F <[email protected]> wrote: >> "Allowing the cost to show up in >> >> both places would break the accounting equation; this transaction must >> balance." >> >> >> So I've been thinking about this and I think that is the fundamental >> problem. Technically, commission (at least in the U.S.) isn't an >> expense, it's an asset. It sounds strange, but think about it. In the >> U.S., the commission counts toward the cost basis and the cost basis is >> recorded with the asset. It's the whole depreciate vs. expense issue >> in accounting. >> >> >> I'm not sure how, but I think the solution is somewhere down that road. >> Maybe creating a fake asset that is the commission per share, maybe a >> sub-asset. >> >> >> The thing is, this isn't a new problem. This isn't a ledger problem so >> much as an accounting problem. Accountants (in the U.S. at least) >> already have to deal with this situation. Does anyone know how >> accountants deal with this currently? > > I found this the other day. It details the flows between various accounts in > a wide range of situations. > > http://timriley.net/appahost/accountancy_model.pdf > > I found it helpful so far in getting my head around fund accounting. > Hopefully, others can get some value from it too. > > Bruce > > > -- > :B -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
