Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

Richard,

I have tested ledger on my example. Once can see input file in Appendix B 

 
of my document

It looks like ledger is able to do calculation they I would have expected 
them to be done. 

Which is cool! 

But, as you said yourself, it is not possible to make ledger put in all in 
one report and to show overall balance

One would have to query ledger is different ways and paste together 
different parts of different reports, to get the situation as presented in 
Appendix 
A 


To get Gain due to commodity price change (trading account)

ledger -f InputFile.txt bal Assets Liabilities --unrealized -X EUR

EUR2048 Assets:Payment

EUR-736  Equity:Unrealized Gains



EUR1312

Note: the fact that ledger puts Assets / Liabilities and Unrealized gain in 
the same report and shows balance between then does not seem to make sense 
for me at the moment. It is not clear, what the resulting balance EUR1312 is 
meant to show. Any way, the unrealized gain is calculated as per Appendix A 


To see the latest balance sheet-like report

ledger -f InputFile.txt bal Assets Liabilities -X EUR

EUR2048  Assets:Payment

To see the Expenses and Income and their balance

ledger -f InputFile.txt bal Expenses Income -X EUR -H

 EUR288  Expenses:Shopping

EUR-600  Income:Salary



EUR-312

Note: it there would be a way to add unrealized gains in this report, but 
NOT to include Assets and Liabilities, this would be exactly what I am 
looking for in terms of Income statement-like report, which shows all 
changes in one report

To list all changes to Assets and Liabilities including “Gain due to 
commodity price change”

ledger -f InputFile.txt reg Assets Liabilities -X EUR

18-Jan-01 Opening balance   Assets:Payment EUR1000  EUR1000

18-Feb-01 Commodities revalued EUR200  EUR1200

18-Feb-02 Step 2 Shopping 1 Assets:Payment EUR-120  EUR1080

18-Feb-03 Step 3. Salary 1  Assets:Payment EUR600  EUR1680

18-Feb-04 Commodities revalued EUR280  EUR1960

18-Feb-05 step 5. Shopping wi.. Liabilities:CreditCard  EUR-168 EUR1792

18-Feb-06 Commodities revalued EUR256  EUR2048

18-Feb-07 Step 7. Payment to .. Liabilities:CreditCard   EUR192 EUR2240

   Assets:Payment EUR-192  EUR2048



On Monday, March 11, 2019 at 11:05:26 AM UTC+1, Richard Lawrence wrote:
>
> Hi Chary and all, 
>
> I don't have time for a long reply but here are some quick thoughts: 
>
> Chary Chary > writes: 
>
>
> > The approach is quite simple 
> > 
> >1. 
> > 
> >Expenses are tracked at the historical exchange rate (e.i. at the 
> >exchange rate, available during transaction). When exchange rate 
> changes, 
> >Expenses and Income do not get re-calculated.   
>
>
> > This is believed to be inline with conventional wisdom , that if you 
> have 
> > consumed pizza for 10 USD, there is no reason to re-calculate how much 
> this 
> > pizza is worth now in EUR, when USD/EUR exchange rate changed. It only 
> > makes sense to know how much that pizza was worth in EUR, when you 
> consumed 
> > it. 
>
> This sounds like ledger's -H/--historical flag. 
>
> >1. 
> > 
> >Assets and Liabilities on the other side are recalculated with every 
> >event of exchange rate change.   
> > 
> > This is also inline with conventional wisdom. If you own 1000 of 
> Currency / 
> > stock XYZ and all of a sudden this currency became more expensive (just 
> > think of Bitcoin), this means you actually got reacher and you want to 
> see 
> > it. 
>
> This sounds like ledger's -X/--exchange flag, in combination with price 
> declarations. 
>
> >1. 
> > 
> >The exchange rate changes are taken care in the following way: 
> > 
> > A special Commodity Revaluation transaction is logged. Following the 
> > principle of double-entry accounting 
> > 
> >- 
> > 
> >one shoulder of transaction is logged to corresponding Asset and / or 
> >Liability accounts to adjust these accounts to new exchange rate. 
> >- 
> > 
> >another shoulder is logged to special Gain due to commodity price 
> change (trading 
> >account, using Peter Selinger’s terminology). 
>
>
> I *think* these commodity revaluation transactions are the same as those 
> generated automatically (which you can see in the register report) when 
> you run with -X.  (If not, you may need to do something to model these 
> transactions in your journal file the way you want them, perhaps with 
> some combination of costs 

Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Richard Lawrence]

Hi Chary and all,

I don't have time for a long reply but here are some quick thoughts:

Chary Chary  writes:


> The approach is quite simple
>
>1. 
>
>Expenses are tracked at the historical exchange rate (e.i. at the 
>exchange rate, available during transaction). When exchange rate changes, 
>Expenses and Income do not get re-calculated.  


> This is believed to be inline with conventional wisdom , that if you have 
> consumed pizza for 10 USD, there is no reason to re-calculate how much this 
> pizza is worth now in EUR, when USD/EUR exchange rate changed. It only 
> makes sense to know how much that pizza was worth in EUR, when you consumed 
> it.

This sounds like ledger's -H/--historical flag.

>1. 
>
>Assets and Liabilities on the other side are recalculated with every 
>event of exchange rate change.  
>
> This is also inline with conventional wisdom. If you own 1000 of Currency / 
> stock XYZ and all of a sudden this currency became more expensive (just 
> think of Bitcoin), this means you actually got reacher and you want to see 
> it. 

This sounds like ledger's -X/--exchange flag, in combination with price
declarations. 

>1. 
>
>The exchange rate changes are taken care in the following way:
>
> A special Commodity Revaluation transaction is logged. Following the 
> principle of double-entry accounting 
>
>- 
>
>one shoulder of transaction is logged to corresponding Asset and / or 
>Liability accounts to adjust these accounts to new exchange rate. 
>- 
>
>another shoulder is logged to special Gain due to commodity price change 
> (trading 
>account, using Peter Selinger’s terminology). 


I *think* these commodity revaluation transactions are the same as those
generated automatically (which you can see in the register report) when
you run with -X.  (If not, you may need to do something to model these
transactions in your journal file the way you want them, perhaps with
some combination of costs ('@' syntax), lot prices ('{ }' syntax), and
(real or virtual) accounts to track the gains and losses.)

So do the following commands show you the answers to the questions that
you're looking for?

1) ledger reg -H Expenses Income
2) ledger reg Assets Liabilities -X 'USD' # or whatever currency

I realize that these are not balance reports where the totals are
grouped by account (but then again, neither is your spreadsheet).  But
do they give you all the information you need to see how you got from
one balance sheet to a later one?

It would be helpful if you could enter the data in your spreadsheet into
a ledger journal file and then see if/how these reports from ledger
differ from what you expect, based on your own spreadsheet.

-- 
Best,
Richard

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

Sorry,

small correction

Expenses and Incomes are tracked at the historical exchange rate



On Sun, Mar 10, 2019 at 4:46 PM Chary Chary  wrote:

> Richard,
>
> thanks for your inputs.
>
> I also was thinking about this. Even more, I have now written a document 
> (Multiple
> currency accounting example with trading account
> ),
>  which
> describes proposed calculation method. As an appendix, this document
> contains google sheet
> ,
> where you can see how the method is implemented and play around with it.
>
> The approach is quite simple
>
>
>1.
>
>Expenses are tracked at the historical exchange rate (e.i. at the
>exchange rate, available during transaction). When exchange rate changes,
>Expenses and Income do not get re-calculated.
>
> This is believed to be inline with conventional wisdom , that if you have
> consumed pizza for 10 USD, there is no reason to re-calculate how much this
> pizza is worth now in EUR, when USD/EUR exchange rate changed. It only
> makes sense to know how much that pizza was worth in EUR, when you consumed
> it.
>
>
>1.
>
>Assets and Liabilities on the other side are recalculated with every
>event of exchange rate change.
>
> This is also inline with conventional wisdom. If you own 1000 of Currency
> / stock XYZ and all of a sudden this currency became more expensive (just
> think of Bitcoin), this means you actually got reacher and you want to see
> it.
>
>
>1.
>
>The exchange rate changes are taken care in the following way:
>
> A special Commodity Revaluation transaction is logged. Following the
> principle of double-entry accounting
>
>-
>
>one shoulder of transaction is logged to corresponding Asset and / or
>Liability accounts to adjust these accounts to new exchange rate.
>-
>
>another shoulder is logged to special Gain due to commodity price
>change (trading account, using Peter Selinger’s terminology).
>
>
> The example calculation can be seen in Appendix A. Google sheet - based
> calculation example
> 
>
> So, to answer your particular question:
>
>
>
>
>
>
>
> *For example, say you gain 1000 USD in income during that period.
> What's the right way to understand that change in terms of EUR?  Should
> we value the 1000 in EUR on the date that you took it in, and use
> that number in a running total of EUR gained and lost throughout the
> period? Or should we continue to think of it as 1000 USD until the very end
> of the period in question, and then convert the running total to EUR
> using the exchange rate at the end of the period? *
>
> In income account, this 1000 USD have to be tracked with historical
> exchange rate
> If however these 1000 USD were put as asset in bank account, then they now
> have to be re-calculated to follow changes in USD/EUR exchange rate AND
> gain due to revaluation has to be logged
>
> Please check my document and see whether it makes sense.
>
> I still need to check your ledger examples. I must say it is quite
> possible, that ledger actually does something like that.
>
> Regards.
>
> Chary
>
>
> On Friday, March 8, 2019 at 9:59:26 AM UTC+1, Richard Lawrence wrote:
>>
>> Hi Chary and all,
>>
>> Chary Chary  writes:
>>
>> > yes, thanks for your patience. Sorry if I did not express myself
>> correctly
>> > initially. You got me right with small corrections. I want:
>> >
>> > - a single report
>> >
>> > - that shows the change in your assets and Liabilities between two
>> points
>> > in time
>> >
>> > - grouped into Accounts (line with the balance) command
>> >
>> > - which includes unrealized gains and losses
>> >
>> > - where the total reflects the overall change
>>
>> OK, after thinking through this a bunch more, and getting myself fairly
>> confused, I believe I have convinced myself that what you're looking for
>> doesn't make sense yet.
>>
>> Here's the problem.  You want a report that lumps together two kinds of
>> changes during a specific time period: actual transactions, recorded in
>> a specific currency (say, USD) and potential gains/losses due to changes
>> of prices in commodities during that period, including alternate
>> currencies (say, EUR).  But these two kinds of changes are orthogonal to
>> one another and it's not yet clear how they should interact.
>>
>> For example, say you gain 1000 USD in income during that period.  What's
>> the right way to understand that change in terms of EUR?  Should we
>> value the 1000 in EUR on the date that you took it in, and use that
>> number in a running total of EUR gained and lost throughout the period?
>> Or should we continue to think of it as 1000 USD until the very end of
>> the period in question, and then 

Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

Richard,

thanks for your inputs.

I also was thinking about this. Even more, I have now written a document 
(Multiple 
currency accounting example with trading account 
),
 which 
describes proposed calculation method. As an appendix, this document 
contains google sheet 
,
 
where you can see how the method is implemented and play around with it.

The approach is quite simple


   1. 
   
   Expenses are tracked at the historical exchange rate (e.i. at the 
   exchange rate, available during transaction). When exchange rate changes, 
   Expenses and Income do not get re-calculated.  
   
This is believed to be inline with conventional wisdom , that if you have 
consumed pizza for 10 USD, there is no reason to re-calculate how much this 
pizza is worth now in EUR, when USD/EUR exchange rate changed. It only 
makes sense to know how much that pizza was worth in EUR, when you consumed 
it.


   1. 
   
   Assets and Liabilities on the other side are recalculated with every 
   event of exchange rate change.  
   
This is also inline with conventional wisdom. If you own 1000 of Currency / 
stock XYZ and all of a sudden this currency became more expensive (just 
think of Bitcoin), this means you actually got reacher and you want to see 
it. 


   1. 
   
   The exchange rate changes are taken care in the following way:
   
A special Commodity Revaluation transaction is logged. Following the 
principle of double-entry accounting 

   - 
   
   one shoulder of transaction is logged to corresponding Asset and / or 
   Liability accounts to adjust these accounts to new exchange rate. 
   - 
   
   another shoulder is logged to special Gain due to commodity price change 
(trading 
   account, using Peter Selinger’s terminology). 
   

The example calculation can be seen in Appendix A. Google sheet - based 
calculation example 


So, to answer your particular question:







*For example, say you gain 1000 USD in income during that period. 
 What's the right way to understand that change in terms of EUR?  Should 
we value the 1000 in EUR on the date that you took it in, and use 
that number in a running total of EUR gained and lost throughout the 
period? Or should we continue to think of it as 1000 USD until the very end 
of the period in question, and then convert the running total to EUR 
using the exchange rate at the end of the period? *

In income account, this 1000 USD have to be tracked with historical 
exchange rate
If however these 1000 USD were put as asset in bank account, then they now 
have to be re-calculated to follow changes in USD/EUR exchange rate AND 
gain due to revaluation has to be logged

Please check my document and see whether it makes sense.

I still need to check your ledger examples. I must say it is quite 
possible, that ledger actually does something like that. 

Regards.

Chary


On Friday, March 8, 2019 at 9:59:26 AM UTC+1, Richard Lawrence wrote:
>
> Hi Chary and all, 
>
> Chary Chary > writes: 
>
> > yes, thanks for your patience. Sorry if I did not express myself 
> correctly 
> > initially. You got me right with small corrections. I want: 
> > 
> > - a single report 
> > 
> > - that shows the change in your assets and Liabilities between two 
> points 
> > in time 
> > 
> > - grouped into Accounts (line with the balance) command 
> > 
> > - which includes unrealized gains and losses 
> > 
> > - where the total reflects the overall change 
>
> OK, after thinking through this a bunch more, and getting myself fairly 
> confused, I believe I have convinced myself that what you're looking for 
> doesn't make sense yet. 
>
> Here's the problem.  You want a report that lumps together two kinds of 
> changes during a specific time period: actual transactions, recorded in 
> a specific currency (say, USD) and potential gains/losses due to changes 
> of prices in commodities during that period, including alternate 
> currencies (say, EUR).  But these two kinds of changes are orthogonal to 
> one another and it's not yet clear how they should interact. 
>
> For example, say you gain 1000 USD in income during that period.  What's 
> the right way to understand that change in terms of EUR?  Should we 
> value the 1000 in EUR on the date that you took it in, and use that 
> number in a running total of EUR gained and lost throughout the period? 
> Or should we continue to think of it as 1000 USD until the very end of 
> the period in question, and then convert the running total to EUR using 
> the exchange rate at the end of the period? 
>
> It seems that you can *either* ask the question: 
>
> (1) How did my *actual* assets change during a specific *period* in time? 
>
> or: 
>
> (2) 

Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Richard Lawrence]

Hi Chary and all,

Chary Chary  writes:

> yes, thanks for your patience. Sorry if I did not express myself correctly
> initially. You got me right with small corrections. I want:
>
> - a single report
>
> - that shows the change in your assets and Liabilities between two points
> in time
>
> - grouped into Accounts (line with the balance) command
>
> - which includes unrealized gains and losses
>
> - where the total reflects the overall change

OK, after thinking through this a bunch more, and getting myself fairly
confused, I believe I have convinced myself that what you're looking for
doesn't make sense yet.

Here's the problem.  You want a report that lumps together two kinds of
changes during a specific time period: actual transactions, recorded in
a specific currency (say, USD) and potential gains/losses due to changes
of prices in commodities during that period, including alternate
currencies (say, EUR).  But these two kinds of changes are orthogonal to
one another and it's not yet clear how they should interact.

For example, say you gain 1000 USD in income during that period.  What's
the right way to understand that change in terms of EUR?  Should we
value the 1000 in EUR on the date that you took it in, and use that
number in a running total of EUR gained and lost throughout the period?
Or should we continue to think of it as 1000 USD until the very end of
the period in question, and then convert the running total to EUR using
the exchange rate at the end of the period?

It seems that you can *either* ask the question:

(1) How did my *actual* assets change during a specific *period* in time?

or:

(2) Given my actual assets at a specific *point* in time, what potential
gains/losses would I incur by converting those assets to another
commodity (say, another currency) *at that point in time*?

but I don't think it makes sense to ask:

(3) How did my assets, including *unrealized* (i.e., potential)
gains/losses due to currency conversions, change during a specific
period?

In other words, I don't think it makes sense to talk about how the
*unrealized* value of assets *changed* over a period in time.  Or at
least, it doesn't make sense until you make some decisions about how to
define the non-actual value of assets at different points in time.

You can answer question (1) in a variety of ways.  The easiest one is
just:

ledger bal Assets -b begin_date -e end_date

(Note: begin_date must be some time *after* your opening balances, if
you only want to see changes, not the full total for the account on the
day before end_date.)

If you want a breakdown of where those changes come from, you might find
this version more helpful:

ledger reg Assets -b begin_date -e end_date --related --subtotal

On the other hand, using -b/-e with -X and --unrealized doesn't seem to
make sense, as I explained above (although ledger happily accepts them
both, probably because it uses one of the specific interpretations I
mentioned to understand your non-actual assets across a given period).
To answer question (2), you need something like:

ledger bal Assets --unrealized -X some_commodity

perhaps adding --now=... or -e end_date if you want to know your
unrealized gains/losses in some_commodity at a point in time other than
right now.

Does this make sense?

-- 
Best,
Richard

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[o1bigtenor]

On Thu, Mar 7, 2019 at 9:16 AM Chary Chary  wrote:
>
> Richard,
>
> yes, thanks for your patience. Sorry if I did not express myself correctly 
> initially. You got me right with small corrections. I want:
> - a single report - that shows the change in your assets and Liabilities 
> between two points in time
>
This report is called 'Net Worth' using GAAP terms. Used by businesses
all the time.
>
> I need to study more all these Leger's options.
> It seems to be really powerful tool, but not straightforward. I think to 
> understand ones needs to know internal data representation of the tool, what 
> it does and how it presents data internally.
>
I agree with the first part of your sentence. The second is perhaps
not accurate.
Excellent accounting information is highly complex. Check out forward
cost accounting
for product development if you want to have a lot of 'fun'. Often that
innate complexity of
accounting is what is being reflected by ledger . The logic is simple
- - as is that for 'record
keeping' but that doesn't mean that the process nor the use is. I find
that's why some people
get someone else to do this - - - its easier to just use the final
reports. (Making sure that
these reports are accurate is quite another job though!)

Dee

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

Richard,

yes, thanks for your patience. Sorry if I did not express myself correctly
initially. You got me right with small corrections. I want:

- a single report

- that shows the change in your assets and Liabilities between two points
in time

- grouped into Accounts (line with the balance) command

- which includes unrealized gains and losses

- where the total reflects the overall change

Your proposed command did not really worked for me (generated an error).
But this one worked

ledger -f ledger.txt  reg Assets -X EUR
18-Jan-01 Opening Balance   Assets:Checking EUR1000
EUR1000
18-Jul-01 *Commodities revalued* EUR500
EUR1500

So, now ledger  shows unrealized gain as *Commodities revalued  .*

I need to study more all these Leger's options

It seems to be really powerful tool, but not straightforward. I think to
understand ones needs to know internal data representation of the tool,
what it does and how it presents data internally.


On Thu, Mar 7, 2019 at 1:18 PM Richard Lawrence  wrote:

> Hi Chary and all,
>
> Chary Chary  writes:
>
> > Ok, I am not an accountant, so  am expressing this from my personal
> point
> > of view and personal needs
>
> Me too. :)
>
> To be honest, I don't approach ledger by thinking in terms of reports.
> Instead, I just have a bunch of questions I like to ask of my finances,
> some of them regularly, some of them only once in a while.  For the
> former kind of question, I have a few pre-defined commands.  For the
> latter kind of question, I usually just figure out how to query ledger
> for the information I want on the fly.  I don't worry about how the
> output looks, as long as it contains the information I'm looking for.
>
> You seem to be thinking about ledger more in terms of predefined
> reports.  That's fine!  These reports exist, after all, because they're
> useful ways of organizing and conceptualizing financial data.  But I
> would suggest that you might find it more helpful to think in terms of
> "What kind of questions do I need ledger to answer?" My experience,
> anyway, is that it's usually more straightforward to think in these
> terms than in terms of "How can I use ledger to generate report X?"
> (mostly because that question gets you thinking more about formatting,
> rather than the information itself, and formatting can get complicated).
>
> If you need reports in a specific format -- e.g. because you are running
> a business -- ledger can probably produce them (possibly in combination
> with other tools).  But I'm not the best person to help with that,
> unfortunately. :)
>
> > I must say though, I have a feeling, that I am still missing something.
> I
> > just don't understand how people, who do investments, own stock can live
> > without such report. Is't it logical to be able to explain a delta in
> your
> > financial net worth between 2 periods of time?
>
> > So much salary
> > so much expenses
> > so much increase due to company XXX shared change
> >
> > Overall change 
> >
> > Without such report you would look at 2 balance sheet reports (A and B)
> but
> > would not know how exactly you came from A to B.
>
> OK, I think I see more clearly what you're looking for now: you want
>
> - a single report
> - that shows the change in your assets between two points in time
> - grouped into positive and negative changes (i.e., Income and Expenses)
> - which includes unrealized gains and losses
> - where the total reflects the overall change
>
> Is that right?  If so, I don't think it's super trivial but I believe it
> is possible, so let's figure out how to do it.  (Hopefully other people
> can chime in here, because as I said, reports are not my strong point.)
>
> A reasonable first approximation is something like:
>
> ledger -f your_file reg Assets --group-by='amount < 0' --related -X EUR
>
> though that doesn't show the total, and has one transaction (rather than
> one account) per line.
>
> --
> Best,
> Richard
>

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Richard Lawrence]

Hi Chary and all,

Chary Chary  writes:

> Ok, I am not an accountant, so  am expressing this from my personal point 
> of view and personal needs

Me too. :)

To be honest, I don't approach ledger by thinking in terms of reports.
Instead, I just have a bunch of questions I like to ask of my finances,
some of them regularly, some of them only once in a while.  For the
former kind of question, I have a few pre-defined commands.  For the
latter kind of question, I usually just figure out how to query ledger
for the information I want on the fly.  I don't worry about how the
output looks, as long as it contains the information I'm looking for.

You seem to be thinking about ledger more in terms of predefined
reports.  That's fine!  These reports exist, after all, because they're
useful ways of organizing and conceptualizing financial data.  But I
would suggest that you might find it more helpful to think in terms of
"What kind of questions do I need ledger to answer?" My experience,
anyway, is that it's usually more straightforward to think in these
terms than in terms of "How can I use ledger to generate report X?"
(mostly because that question gets you thinking more about formatting,
rather than the information itself, and formatting can get complicated).

If you need reports in a specific format -- e.g. because you are running
a business -- ledger can probably produce them (possibly in combination
with other tools).  But I'm not the best person to help with that,
unfortunately. :)

> I must say though, I have a feeling, that I am still missing something. I 
> just don't understand how people, who do investments, own stock can live 
> without such report. Is't it logical to be able to explain a delta in your 
> financial net worth between 2 periods of time?

> So much salary
> so much expenses
> so much increase due to company XXX shared change
>
> Overall change 
>
> Without such report you would look at 2 balance sheet reports (A and B) but 
> would not know how exactly you came from A to B.

OK, I think I see more clearly what you're looking for now: you want

- a single report
- that shows the change in your assets between two points in time
- grouped into positive and negative changes (i.e., Income and Expenses)
- which includes unrealized gains and losses 
- where the total reflects the overall change

Is that right?  If so, I don't think it's super trivial but I believe it
is possible, so let's figure out how to do it.  (Hopefully other people
can chime in here, because as I said, reports are not my strong point.)

A reasonable first approximation is something like:

ledger -f your_file reg Assets --group-by='amount < 0' --related -X EUR 

though that doesn't show the total, and has one transaction (rather than
one account) per line. 

-- 
Best,
Richard

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

 

> Here, I don't follow you.  (Maybe I don't understand what an "income 
> statement-like" report is?) 
>
>
Ok, I am not an accountant, so  am expressing this from my personal point 
of view and personal needs

There are 2  financial reports, which are linked to each other

Balance sheet https://en.wikipedia.org/wiki/Balance_sheet

It effectively lists Assets and Liabilities. The difference between them 
shows your net worth. It shows how much you have at a specific moment in 
time. Since ledger does not have explicit special Balance Sheet report, one 
can produce something like this by running: 

ledger -f ledger.txt bal Assets Liabilities


Income Statement https://en.wikipedia.org/wiki/Income_statement

It shows changes to your finance over period of time. Changes happen due to 
expenses and incomes. Difference between them shows how much you lost or 
gained over a period of time.

Since ledger does not have explicit special Income statement report, to 
produce an equivalent report one would need to do:

ledger -f ledger.txt bal Income Expenses

Now, if one does not do investment and uses only single currency, Income 
Statement, when run over period of time will show you exactly where the 
difference between 2 balance sheet reports came from. In another words:

Starting Balance Sheet Net Worth + Income statement Net Gain/ Loss = 
Closing Balance  Sheet Net Worth

However if you deal with different commodities, this will not work.  (See 
my original example).

There is however another report for this. In Financial world it is called 
*Statement 
of Comprehensive Income* 
https://www.investopedia.com/terms/c/comprehensiveincome.asp

*Comprehensive income includes net income and unrealized income, such as 
unrealized gains/losses on hedge/derivative financial instruments and 
foreign currency transaction gains/losses. Comprehensive income provides a 
holistic view of a company's income not fully captured on the income 
statement.*

Here is 
example 
https://www.myaccountingcourse.com/financial-statements/images/other-comprehensive-income-statement-example.jpg

I referenced  investopedia just to show, that what I am looking for is not 
something strange.

Originally I was just looking for some report to provide a delta between 2 
of my balances sheets reports.


Ledger is able to show unrealized gains, however it also pulls Assets in 
the same report. But I do not want assets to be shown on the same report 
together with unrealized gains. 

  

I must say though, I have a feeling, that I am still missing something. I 
just don't understand how people, who do investments, own stock can live 
without such report. Is't it logical to be able to explain a delta in your 
financial net worth between 2 periods of time?

So much salary
so much expenses
so much increase due to company XXX shared change

Overall change 
 

Without such report you would look at 2 balance sheet reports (A and B) but 
would not know how exactly you came from A to B.

>
>

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[John Wiegley]

> Richard Lawrence  writes:

> I think John answered without seeing that you had already tried
> --unrealized, so let me try to help:

Indeed, thank you for catching that, Richard. :)

John

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Richard Lawrence]

Hi Chary and all,

Here's a few more thoughts.

Chary Chary  writes:

> ok, thanks, it works indeed! Great!  It also works if I run report on 
> assets all together
>
> ledger -f ledger.txt bal Assets  -X EUR --now 2018-12-31 --unrealized
>
> But I am just thinking aloud here.
>
> Unrealized gains can only happen against assets, they cannot happen against 
> expenses or income. Correct?  So, to see all unrealized gains one just 
> needs to mention
>   
> bal Assets

Yes, that makes sense to me.

> However unrealized gains only make sense to show in "Income statement-like 
> report", hence in report, which contains Income and Expenses, but not 
> Assets, however I am forced to include Assets.

Here, I don't follow you.  (Maybe I don't understand what an "income
statement-like" report is?)

Conceptually, it seems to me that unrealized gains or losses have
nothing to do with income and expenses.  Income and expenses seem like
*realized* gains and losses, pretty much by definition, right?  If
you're in the context of asking about unrealized gains and losses,
you're not asking about income and expenses you actually had -- you're
asking about what income or expenses you *could potentially* have, if
you were to make a transaction that realizes them.

> Ledger does calculate unrealized gain correctly
>
> ledger -f ledger.txt bal Assets  -X EUR --now 2018-12-31 --unrealized
>  EUR1500  Assets:Checking
>  EUR-500  Equity:Unrealized Gains
> 
>  EUR1000
>
> But what is the meaning of these EUR1000 below the line?
> What Ledger is trying to tell me?
> Does it make any sense to add together Assets and unrealized gains? 
> I don't think these 1000 EUR have any sense

Well, as you recognize, the 1000 EUR you see here is just the sum of the
lines above.  Here's how I'd think about this report:

(potential assets) - (unrealized gains) = (actual assets)

>From that perspective, it makes sense.  The 1500 EUR on the first line
does not represent your actual current assets (according to your example
file, you don't *actually* have *any* euros!), but your potential
assets.  I guess the question is in what sense 1000 EUR represents your
"actual assets" here, but that has a pretty straightforward answer: it
represents the value in euros of the actual dollars in your account, at
the time they entered that account.

If you were to realize these gains by exchanging currencies, then you
could record the gains as Income.  I *think* this would be the right way
to do that:

2018-01-01  Opening Balance
Assets:Checking 1000.00 USD
Equity:Opening Balances

2018-07-10 My Currency Broker
; cash in on a sweet exchange rate!
Assets:Checking  1500.00 EUR
Assets:Checking -1000.00 USD {1 EUR} @ 1.5 EUR
Income:Realized Currency Gains

This uses ledger's notion of "lot price" to track the gains, following
the example with stocks in the manual.  Basically, the second
transaction says: I exchanged 1000 USD, which were valued at 1 EUR at
the time I acquired them, for 1500 EUR, at a rate of 1.5 EUR/USD.  The
unbalanced 500 EUR is realized as income, as you'll see if you run the
balance report.

Can someone with more experience confirm that this is the right way to
do it?  I'm also interested in this question.

-- 
Best,
Richard

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

Richard,

ok, thanks, it works indeed! Great!  It also works if I run report on 
assets all together

ledger -f ledger.txt bal Assets  -X EUR --now 2018-12-31 --unrealized


But I am just thinking aloud here.

Unrealized gains can only happen against assets, they cannot happen against 
expenses or income. Correct?  So, to see all unrealized gains one just 
needs to mention

  
bal Assets
 

However unrealized gains only make sense to show in "Income statement-like 
report", hence in report, which contains Income and Expenses, but not 
Assets, however I am forced to include Assets.

You can see on the below example


2018-01-01  Opening Balance
Assets:Checking 1000.00 USD
Equity:Opening Balances


P 2018-01-01 USD 1 EUR
P 2018-07-01 USD 1.5 EUR
==


So, at the end of the year I became 500 Euro richer due to exchange rate 
change.

Ledger does calculate unrealized gain correctly

ledger -f ledger.txt bal Assets  -X EUR --now 2018-12-31 --unrealized
 EUR1500  Assets:Checking
 EUR-500  Equity:Unrealized Gains

 EUR1000



But what is the meaning of these EUR1000 below the line?
What Ledger is trying to tell me?
Does it make any sense to add together Assets and unrealized gains? 
I don't think these 1000 EUR have any sense

I would expect some report, which would have EUR -500 below the line. 
Because I because richer by 500 EUR, which is supposed to be -500 in income 
statement in ledger's terms

Do you have any comments?


On Wednesday, March 6, 2019 at 1:29:43 PM UTC+1, Richard Lawrence wrote:
>
> Hi Chary, 
>
> Chary Chary > writes: 
>
> > But I can't find any report, which would show me why assets have 
> increased 
> > 2 times. Option --unrealized  does not have any effect in this case 
> > 
> > I would expect some report, which would say something like 
> > 
> > -1000 EUR Unrealized gain 
> > -1000 EURUnrealized gain due to EUR/USD changes 
> > 
> > So, how can it be done? 
>
> I think John answered without seeing that you had already tried 
> --unrealized, so let me try to help: 
>
> There is something sort of subtle going on with --unrealized.  If you 
> just run the balance report with --unrealized, but without specifying 
> any account like you did here: 
>
> > C:\_code\ledger>ledger -f ledger.txt balance -X EUR --now 2018-12-31 
> >  EUR2000  Assets:Checking 
> > EUR-2000  Equity:Opening Balances 
> >  
> >0 
>
> then you won't see any unrealized gains.  But if you specifically ask 
> for the balance of the Checking account in EUR, you'll see the 
> unrealized gains: 
>
> ledger -f ledger.txt bal Checking  -X EUR --now 2018-12-31 --unrealized 
>  EUR2000  Assets:Checking 
> EUR-1000  Equity:Unrealized Gains 
>  
>  EUR1000 
>
> I don't know exactly why this is, or even whether it's expected 
> (vs. being a bug), but maybe it makes some sense: when you're getting 
> the balance of all accounts together, including Equity, there are no 
> "unrealized" gains (the gains are "realized" in Equity, or at least 
> reflected in the balance of the Equity account, as you noticed).  But 
> when you are just getting the balance of Checking, and you're getting it 
> in a currency other than the amount actually inside that account, then 
> there are unrealized gains in that account, which ledger notices. 
>
> Hope that helps! 
>
> -- 
> Best, 
> Richard 
>

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Richard Lawrence]

Hi Chary,

Chary Chary  writes:

> But I can't find any report, which would show me why assets have increased 
> 2 times. Option --unrealized  does not have any effect in this case
>
> I would expect some report, which would say something like 
>
> -1000 EUR Unrealized gain
> -1000 EURUnrealized gain due to EUR/USD changes
>
> So, how can it be done?

I think John answered without seeing that you had already tried
--unrealized, so let me try to help:

There is something sort of subtle going on with --unrealized.  If you
just run the balance report with --unrealized, but without specifying
any account like you did here:

> C:\_code\ledger>ledger -f ledger.txt balance -X EUR --now 2018-12-31
>  EUR2000  Assets:Checking
> EUR-2000  Equity:Opening Balances
> 
>0

then you won't see any unrealized gains.  But if you specifically ask
for the balance of the Checking account in EUR, you'll see the
unrealized gains:

ledger -f ledger.txt bal Checking  -X EUR --now 2018-12-31 --unrealized
 EUR2000  Assets:Checking
EUR-1000  Equity:Unrealized Gains

 EUR1000

I don't know exactly why this is, or even whether it's expected
(vs. being a bug), but maybe it makes some sense: when you're getting
the balance of all accounts together, including Equity, there are no
"unrealized" gains (the gains are "realized" in Equity, or at least
reflected in the balance of the Equity account, as you noticed).  But
when you are just getting the balance of Checking, and you're getting it
in a currency other than the amount actually inside that account, then
there are unrealized gains in that account, which ledger notices.

Hope that helps!

-- 
Best,
Richard

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[John Wiegley]

> "CC" == Chary Chary  writes:

CC> But I can't find any report, which would show me why assets have increased
CC> 2 times. Option --unrealized  does not have any effect in this case

It's giving you present market valuation, which has doubled because you stated
that the price had doubled.

Perhaps you wanted the --unrealized options?

 --unrealized
  Show generated unrealized gain and loss accounts in the balance 
report.

 --unrealized-gains
  Allow the user to specify what account name should be used for 
unrealized
  gains.  Defaults to Equity:Unrealized Gains.  Often set in one's 
~/.ledgerrc
  file to change the default.

 --unrealized-losses
  Allow the user to specify what account name should be used for 
unrealized
  losses.  Defaults to Equity:Unrealized Losses.  Often set in one's
  ~/.ledgerrc file to change the default.

John

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Chary Chary]

Hello.

I did some reading, but I still can't figure out how to do what I need.

I have a very simple ledger file:

==
2018-01-01  Opening Balance
Assets:Checking 1000.00 USD
Equity:Opening Balances

P 2018-01-01 USD 1 EUR
P 2018-07-01 USD 2 EUR
===

So, so transactions what so ever, only opening balance and  price change

If I run balance report for the beginning of period I get expected result



ledger -f ledger.txt balance -X EUR --now 2018-01-01
 EUR1000  Assets:Checking
EUR-1000  Equity:Opening Balances

   0

===

If I run balance report for end of the year (after exchange rate changed), 
I also get correct result


===

C:\_code\ledger>ledger -f ledger.txt balance -X EUR --now 2018-12-31
 EUR2000  Assets:Checking
EUR-2000  Equity:Opening Balances

   0
===

But I can't find any report, which would show me why assets have increased 
2 times. Option --unrealized  does not have any effect in this case

I would expect some report, which would say something like 

-1000 EUR Unrealized gain
-1000 EURUnrealized gain due to EUR/USD changes

So, how can it be done?


On Wednesday, February 27, 2019 at 2:26:01 PM UTC+1, Richard Lawrence wrote:
>
> Dear Chary, 
>
> Chary Chary > writes: 
>
> > So, I want to be able to explain a delta between a balance sheet at the 
> > beginning of the ear and at the end. 
> > 
> > E.g.: 
> > 
> > I got so much salary 
> > I paid so much costs 
> > 
> > But also: 
> > Lost so much due to exchange rate change 
> > Gained to much due to stock price increase etc. 
>
> The short answer to your question is yes, ledger can do that. 
>
> The long answer as to *how* exactly you get it to do that depends 
> somewhat on your needs.  It's straightforward to do things like show how 
> much salary you earned.  It's also pretty straightforward to find out 
> how much you lost or gained due to currency exchanges or stock gains, 
> though these depend on you representing your data in the right way.  I'd 
> suggest that you install ledger and then read the first few sections of 
> the manual: 
>
> https://www.ledger-cli.org/docs.html 
>
> Section 4.5 ("Currency and commodities") and Section 5 ("Transactions") 
> will be especially relevant for you.  I suggest you play around with 
> representing your data after reading these sections, then ask again here 
> if you need help building reports with exactly the output you want. 
>
> -- 
> Best, 
> Richard 
>

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Re: Income Statement" aka "Profit/Loss Statement" with unrealized gain due to changes in stock and currency exchange rate

[Richard Lawrence]

Dear Chary,

Chary Chary  writes:

> So, I want to be able to explain a delta between a balance sheet at the 
> beginning of the ear and at the end. 
>
> E.g.: 
>
> I got so much salary 
> I paid so much costs 
>
> But also: 
> Lost so much due to exchange rate change 
> Gained to much due to stock price increase etc. 

The short answer to your question is yes, ledger can do that.

The long answer as to *how* exactly you get it to do that depends
somewhat on your needs.  It's straightforward to do things like show how
much salary you earned.  It's also pretty straightforward to find out
how much you lost or gained due to currency exchanges or stock gains,
though these depend on you representing your data in the right way.  I'd
suggest that you install ledger and then read the first few sections of
the manual:

https://www.ledger-cli.org/docs.html

Section 4.5 ("Currency and commodities") and Section 5 ("Transactions")
will be especially relevant for you.  I suggest you play around with
representing your data after reading these sections, then ask again here
if you need help building reports with exactly the output you want.

-- 
Best,
Richard

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