8th June 2017
I’m having trouble with getting a valuation (in pounds sterling –
hereafter GBP – I am based in the UK) for a share I own that is priced
in Euros.
To bore you with the details my original account listing was of this form:
Assets
>My Assets
>>My Portfolio
>>>My Cash
>>>My Shares
>>>>Airbus Group
>>>> Standard GBP denominated shares
etc etc
At this point everything except “Airbus Group” was denominated in GBPs,
Airbus Group was denominated in Euros.
I noticed the problem when I realised that value of the Airbus Group
shares (in the column headed "Present(GBP)"was given as £3989 but the
real value should be 89(the number of shares)*€73.07(the value of each
share)*0.87(the Euro to GBP exchange rate) ie £5658. (All the numbers
are rounded.)
Using the information I found during various web searches (insofar as I
understood it all) it seemed the problem might be that the account “My
Shares” was denominated in GBP but “Airbus Group” is denominated in
Euros. I modified the account structure to the following form:
Assets
>My Assets
>>My Portfolio
>>>My Cash
>>>>Cash Euros
>>>>Cash Pounds
>>>My Eurex Shares
>>>>Airbus Group
>>>My LSE Shares
>>>> Standard GBP denominated shares
etc etc
With “Cash Euros”, “My Eurex Shares” and “Airbus Group” denominated in
Euros, everything else is denominated in GBPs.
I transferred some funds from “Cash Pounds” to “Cash Euros”; the
original “Airbus Group” was deleted and a new account was reconstituted
(there were very few entries) with the purchase made from “Cash Euros”.
The result was that the GBP value of the Airbus shares was (still) shown
as £3989.
More web searches revealed nothing that I recognised as of relevance.
The only thoughts that I have that may be significant are:
(A) “Cash Euros” and “Airbus Group”, although denominated in Euros, are
deep(ish) in a tree denominated in GBPs and, in particular, “Cash Euros”
is a sub-account of “My Cash” which is denominated in GBPs. Does this
somehow interfere with the correct accounting?
(B) My broker pays Airbus dividends to me in GBPs and thus some of the
transactions in the “Airbus Group” account reference the “Cash Pounds”
account. If this is the problem: assuming the dividend I receive is
£12.34 would it be possible to credit €12.34 to “Cash Euro” and transfer
it to “Cash Pounds” at an exchange rate of 1:1 without screwing up
something else?
I suppose I could just live with the “error” but what is accounting
without accuracy!
A separate set of accounts for one share seems too much like overkill.
Thanks in advance for any help or advice offered.
Eric Coates
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