Re: How to record and keep track of stock share ?
On 25 June 2014 3:08:19 PM AEST, Rick F r...@farnbach.com 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 ledger-cli+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
Re: How to record and keep track of stock share ?
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 brul...@gmail.com wrote: On 25 June 2014 3:08:19 PM AEST, Rick F r...@farnbach.com 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 ledger-cli+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
Re: How to record and keep track of stock share ?
On 24.06.14,22:08, Rick F 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? Rick On Saturday, June 14, 2014 10:50:32 AM UTC-7, Martin Blais wrote: Would this then be the best way to calculate it? ; Initial openings at 2014/01/012014-01-01 Opening Balance Assets:Bank:Check Account 5000,00 € Equity:Opening Balance ; Details of shares at 2014/01/01 ;P 2014-01-01 00:00:00 ShareA 20 € ;P 2014-01-01 00:00:00 ShareB 100 € 2014-01-01 Details for shares Equity:Opening Balance:Initial Investments Assets:Investments:Stocks:ShareA15 ShareA @ 20 € Assets:Investments:Stocks:ShareB5 ShareB @ 100 € ; Details of shares at 2014/04/01 P 2014-04-01 00:00:00 ShareA 30 € P 2014-04-01 00:00:00 ShareB 120 € ; Selling 2 ShareB at 2014/04/01 2014-04-01 Selling 2 ShareB Assets:Investments:Stocks:ShareB -2 ShareB @ 100 € Assets:Commission-9,90 € Assets:Cash2 ShareB @ 120 € Income:Investment Gains ; Details of shares at 2014/05/02 P 2014-05-01 00:00:00 ShareA 70 € P 2014-05-01 00:00:00 ShareB 120 € Selling 2 ShareA at 2014/05/01 2014-04-02 Selling 4 ShareA Assets:Investments:Stocks:ShareA -4 ShareA @ 20 € Assets:Commission -9,90 € Assets:Cash 2 ShareA @ 120 € Income:Investment Gains Jostein -- --- 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 ledger-cli+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
Re: How to record and keep track of stock share ?
On Fri, Jun 27, 2014 at 4:00 PM, Rick Farnbach r...@farnbach.com wrote: 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. There's no right or wrong, right is how you choose to look at it. Usually you want to look at it the same way the tax man does, but you may also want to be able to look at your PnL separately from its trading costs. Pulling it out of a book doesn't legitimize it one way or another. -- --- 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 ledger-cli+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
Re: How to record and keep track of stock share ?
On Fri, Jun 27, 2014 at 5:36 PM, Jostein Berntsen jber...@broadpark.no
wrote:
On 24.06.14,22:08, Rick F 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?
Rick
On Saturday, June 14, 2014 10:50:32 AM UTC-7, Martin Blais wrote:
Would this then be the best way to calculate it?
Nope.
(Explanations below.)
; Initial openings at 2014/01/012014-01-01 Opening Balance
Assets:Bank:Check Account 5000,00 €
Equity:Opening Balance
; Details of shares at 2014/01/01
;P 2014-01-01 00:00:00 ShareA 20 €
;P 2014-01-01 00:00:00 ShareB 100 €
2014-01-01 Details for shares
Equity:Opening Balance:Initial Investments
Assets:Investments:Stocks:ShareA15 ShareA @ 20 €
Assets:Investments:Stocks:ShareB5 ShareB @ 100 €
That's correct, if you're just starting your Ledger.
Thereafter, instead of an Equity account you'd be using a cash account and
likely there would be a commissions account.
; Details of shares at 2014/04/01
P 2014-04-01 00:00:00 ShareA 30 €
P 2014-04-01 00:00:00 ShareB 120 €
; Selling 2 ShareB at 2014/04/01
2014-04-01 Selling 2 ShareB
Assets:Investments:Stocks:ShareB -2 ShareB @ 100
€
Assets:Commission-9,90 €
Assets:Cash2 ShareB @ 120 €
Income:Investment Gains
Why are you depositing 2 ShareB in a Cash account?
A cash account can only contain cash.
You sell 2 ShareB at the 100 EUR lot, so that should be using the lot
disambiguation {} syntax, not the price @ syntax. You're selling two of
the 100 EUR lots that you have in the account:
Assets:Investments:Stocks:ShareB -2 ShareB {100
€}
The commission is incorrect too, a commission is an expense, not an asset
and should be positive:
Expenses:Commission9,90 €
Assets are things you have. You can't resell your commissions; it makes no
sense. A commission is clearly an expense.
Then you credit the account with the corresponding amount of cash, that is
2 x 120 = 240 - 9.90 = 230.10 EUR
Assets:Cash230.10 €
That amount would be given to you by your import process or by you looking
at your account statement (if you do it manually). You probably should not
compute this yourself, it's best to use the actual amount reported from the
statement from the institution--that's the real amount, and doing this
provides a check on your data entry.
The legs above sum to: (-2) x 100 + 9.90 + 230.10 = 40 EUR, so in order to
balance, the remaining gains leg should be:
Income:Investment Gains -40 €
You can, of course, leave the amount off of this one and Ledger/Beancount
will compute it automatically.
This does not capitalize the commissions.
I already outlined a method to achieve this and a proposal to extend
Beancount and Ledger's semantics to be able do that in
https://docs.google.com/document/d/1F8IJ_7fMHZ75XFPocMokLxVZczAhrBRBVN9uMhQFCZ4/edit#heading=h.axc1rmv8ctni
In the meantime, in Ledger, you could probably hack a non-balancing
transaction using virtual postings. Beancount does not support virtual
postings, so if you really insist on the PnL without commissions you would
have to enter the adjusted amounts manually (as in the doc) or just live
with the PnL excluding commissions until the proposal is implemented.
; Details of shares at 2014/05/02
P 2014-05-01 00:00:00 ShareA 70 €
P 2014-05-01 00:00:00 ShareB 120 €
Selling 2 ShareA at 2014/05/01
2014-04-02 Selling 4 ShareA
Assets:Investments:Stocks:ShareA -4 ShareA @ 20 €
Assets:Commission -9,90 €
Assets:Cash 2 ShareA @ 120 €
Income:Investment Gains
This is wrong here too, it should be like this, follow the same
prescriptions as above:
2014-05-01 Selling 4 ShareA
Assets:Investments:Stocks:ShareA -4 ShareA {20 €}
Expenses:Commission 9,90 €
Assets:Cash 270.10 €
Income:Investment Gains
... and the gains would be: 270.10 + 9.90 + (-4) x 20 = -200 EUR
Read my
