Hi Geert,
Thank you.
The latest iteration does provide 'report-currency' for both balsheet
(price from the exact column date) and profit&loss (price from
begin/mid/end of column date period) and some cosmetic changes as advised.
No cost-price valuations are implemented. Perhaps this can be parked for
now; and merged when it is confirmed accurate enough.
C
On 26/06/18 17:11, Geert Janssens wrote:
Op dinsdag 26 juni 2018 06:03:07 CEST schreef Christopher Lam:
Hi Stephen
Thank you for valuable feedback... all these issues are cosmetic / account
selection, and are relatively trivial.... except that Placeholder accounts
can also contain transactions therefore must not necessarily accumulate
their children account amounts.
My major concern relates to switching amounts to a so-called "Report
Currency". But IMO this leads to balance sheets to being confused with
'stock valuation'
The existing balance sheet offers weighted-average, average-cost, nearest,
latest. AFAIU weighted-average and average-cost obtains prices from the
actual transactions; nearest means 'use price nearest to report-date', and
latest means 'use today's nearest price'
Let's say I bought:
100 AAPL at $10 in 2006, and
50 AAPL at $20 in 2009; and
AAPL was $110 in 2015
AAPL is about $180 in 2018
I'm wanting stock valuation in 2015.
- original currency - shows 150 AAPL, no price conversion (i.e. simplest)
- cost price - 100x$10 + 50x$20 = $2000 (labour intensive because each
stock transaction must be analysed, and converted using any available price
entry to the report currency)
- nearest - 150x$110 = $16,500 (simple)
- latest - 150x$180 = $27,000 (also simple)
Please check latest showing balsheet multicolumn amounts converted to
report currency; although they're esthetically nice, this has increased the
level of complexity a magnitude a tad too high... (I wouldn't know how/if
income/expense amounts can/must be subject to price conversion...)
I'd be keen to remove price conversion to report currency myself...
Unfortunately you can't.
A balance sheet is used to get a quick overview of the financial situation of
a company. I would want to see this expressed in one currency and I find that
other accounting software around me here does that as well. This is important
to be able to compare the value of the company at different key moments
(fiscal year ends, when a new loan has to be acquired from a bank,...).
So inevitably this will pull in all the complexity of trading and valuation.
And it gets even worse if your report splits out in different time periods.
I don't have much experience in this area unfortunately as I don't manage
stocks or foreign currencies myself in GnuCash.
I can peek how my accountant handles this for our company though.
Currently for our company stock is valued at cost price. However our
accountant says this is a choice. One could just as well decide (at least here
in Belgium) to value stock at report date. It's not up to the application you
use to decide which one. Instead that's an accounting decision (fiscal
optimization). So ideally gnucash supports those two at least.
Note that in case you generate a balance sheet with multiple dates "report
date" really means the closing date for each column. So different prices can
be in use for each column. Or put differently in a multi column balance sheet
you are really computing several independent balance sheets at different
points in time. I haven't deciphered your code yet, so I don't know if that is
how you wrote it.
This is important because when comparing present day's balance sheet with the
closing balance sheet of the last fiscal period I don't want the closing
balance sheet to change based on what happens to be the current price of a
share. Or at least not in all circumstances. I want to be able to compare my
company's current situation with what I reported to my tax authorities for
example.
Also although you mark the cost price example above as "labour intensive" you
have chosen the most simple version of it, namely the situation in which
shares have only been bought but not yet sold.
Suppose you sell 20 AAPL shares at a $25 price in 2010, then what is the cost
price of the 130 shares you have left ? Do you now have
80 shares at $10 + 50 shares at $20 (FIFO principle)
or
100 shares at $10 + 30 shares at $20 (LIFO principle)
or
90 x $10 + 40 x $20 or yet another way ?
I don't know at all what would be correct or legally allowed in different
parts of the world. The first two options seem reasonable.
I think John has looked at this several times in the context of the Advanced
Portfolio report so he may have more insights.
However it looks like we have hit a topic that may benefit from a centralized
set of functions that deal with valuation and that can be reused throughout
the rest of the code.
Geert
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