how to record a specific type of transaction

m.goree.dis's Avatar

m.goree.dis

04 Dec, 2020 03:55 PM

My question is how best to record a transaction for a particular investment type.
1) initial purchase was for a dollar amount, in essence resulting in a share value of $1
2) decreases in total value are reported to me as a negative quantity of shares received (see attached file).
There is no actual exchange of $, just a decrease in total value.The reverse is true for positive increase in total value. 3) Since there are no $'s actual generated by these transactions that need to be accounted for, I'm struggling with how to handle this.

SECOND ISSUE:
How do I modify an investment account's cash value?

  1. 1 Posted by Stuart Beesley ... on 04 Dec, 2020 04:57 PM

    Stuart Beesley - JUST A FELLOW USER and Toolbox ‘guy’'s Avatar

    The last question is easy.... You perform an Xfr (transfer) out of the account (to another account).

    On the first two questions, can you tell us the nature of the +/- share qty? Why do they. do this..? There are several ways to accomplish this, but can mess up capital gains calculations... Let us know what these really are?

    (just a user)

  2. 2 Posted by m.goree.dis on 04 Dec, 2020 05:17 PM

    m.goree.dis's Avatar

    can you tell us the nature of the +/- share qty? Why do they. do
    this..?
                as i understand it, these amounts reflect changes in the total
    value of the underlying instrument. Since the share price is fixed @$1.00,
    I suppose it's the way they reflect changes in the instrument's valuation
    monthly.

  3. 3 Posted by m.goree.dis on 04 Dec, 2020 05:20 PM

    m.goree.dis's Avatar

    You perform an Xfr (transfer) out of the account (to another account).
    Would you also do this if there is a need to just correct the cash acct
    balance? what would be a "destination" acct?
    Could you provide an illustration of you suggestion?

  4. 4 Posted by Stuart Beesley ... on 04 Dec, 2020 06:00 PM

    Stuart Beesley - JUST A FELLOW USER and Toolbox ‘guy’'s Avatar

    Normally you would Xfr money out to another account. Does your question infer that the cash is 'lost'? One method employed by some is to create a JUNK category that you exclude from all reports and Xfr the money from the investment account to the JUNK category (which is actually an account under the covers).... Make sense?

  5. 5 Posted by m.goree.dis on 04 Dec, 2020 06:09 PM

    m.goree.dis's Avatar

    That’s what i have done before. Just thought there might be a better way.
    And yes, the valuation is “lost” in that there is no exchange of funds,
    only an “on paper” change in real value.

  6. 6 Posted by m.goree.dis on 04 Dec, 2020 06:09 PM

    m.goree.dis's Avatar

    Thanks for your input!

  7. 7 Posted by Stuart Beesley ... on 04 Dec, 2020 07:43 PM

    Stuart Beesley - JUST A FELLOW USER and Toolbox ‘guy’'s Avatar

    As for the first two questions. I’ve not seen this before. I get changes in value (zero shares movement) but not changes in shares (zero value movement). For value only changes you can try to use sell/buy zero share qty and put the net adjustment value in the value field. NOTE I say net. If you enter a fee (which I recommend you don’t, the maths are different to normal). NOTE: you can also use divreinvest to increase the value, but then you get a income recorded.

    For share adjust, which seems very odd to me, perhaps it will have to be a sell/buy with zero (or 0.01) value but I think you will have to experiment on the consequences.... including cost basis and capital gains.

    Perhaps someone else has an idea on this? DWG??

  8. 8 Posted by dwg on 04 Dec, 2020 08:40 PM

    dwg's Avatar

    I'm a fellow user.

    I have seen this method used, and I have also seen software that allows for it. Moneydance does not, I have suggested that it should be looked at to see if a way could be devised within the software, Moneydance being based on double entry accounting makes it a little more difficult as money cannot just disappear.

    It is generally used where the components are not reported and the reporting is only at the total level.

    How to manage this depends to a degree what you want to get out of it, whether it to be just accurate recording of the investment or whether you want to get some performance data out of it.

    If it is just to keep track of the investment then the simplest way is to use an asset account. Changes in value are reported as payments or deposits using a category created for the purpose.

    You can do something comparable in Investment accounts with extra buy and sell transactions for the change in value, share price number of shares being the value again you use the custom category to take care of the dollars with Xfr transactions (or you can use BuyXFR and SellXft to combine the transactions)

    In both of these cases you are just tracking value, you have no performance information or anything else.

    If you want to get a guide on performance well you have to be willing to get your hands a little dirty.

    The point to note is that performance in Investments in Moneydance is determined by the change in unit value i.e. the unit or share price. It is not something you have but it is a value you can get a derive value for.

    This is where you keep a little spreadsheet to work it out for you, let me provide a little example how it should work.

    Suppose your initial transaction cost you $2140. You would enter it as a transaction of:

    Total value = 2140
    number of shares = 2140
    cost per share = 1

    You can see the initial value is correct.

    Now suppose your next monthly statement says the value has increased by 45. so the investment is now worth 2185

    You have a spreadsheet set up that the enter the new total and does the calculation of 2185/2140 which gives you about 1.0210. You enter this as the current price of a share.

    You can extend the spreadsheet to cope with extra deposits or withdrawals being carried out using your current calculated price, so in effect you build up a price history table with the value of transactions included in it.

    This is the way I handle a couple of funds that I really can only readily get current values of. I use this method as I want to keep an eye on how the overall performance is, I have to look at the information at the Investment house to look at the components.

  9. 9 Posted by m.goree.dis on 04 Dec, 2020 09:42 PM

    m.goree.dis's Avatar

    Thank’s for your response. I’m thinking I will use the 1st method you
    mentioned.

  10. Melissa closed this discussion on 29 Jan, 2021 02:34 AM.

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