Investment Fee Category

djxb2000-1's Avatar

djxb2000-1

20 Dec, 2015 12:39 AM

How do you categorize investment transaction fees?

  1. 1 Posted by Tom Freeman on 21 Dec, 2015 12:35 AM

    Tom Freeman's Avatar

    There is a default expense sub-category to investment category named "trading commission". If you want, you can create a category more to your liking by going to tools > categories, select new.

    You can make this the default category for your investment account by going to account edit account and changing the default on the edit account window.

    In the investment transaction there is a fee category field as well as a fee field for the charge. When making a stock trade you would enter the category and amount of the fee in these fields.

    Tom Freeman
    Infinite Kind Support

  2. 2 Posted by djxb2000-1 on 21 Dec, 2015 02:30 AM

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    But it isn't an expense, is it? The fee is part of the cost of the asset and the software is already handling it as such.

    E.G.,
    Shares bought - 250
    Price/share - 103.00
    Fee - 8.95

    The total amount of the transaction is 250 x 103 + 8.95 = 25,758.95, which is the cost basis of the security on the Securities Detail screen, where the cost per share is 103.04. So Moneydance has already capitalized the fee. I don't think it should be expensed as well. If I were keeping a real set of books I think this would put me out of balance by 8.95.

    I can live with having a bogus expense category and subtracting it from my total expenses, but I really think this is incorrect. Or am I missing something?

  3. 3 Posted by dwg on 21 Dec, 2015 04:36 AM

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    The commission payable on share purchases is not handled as an expense it forms part of the cost basis of the shares and as such it is treated as part of the capital expense.

  4. 4 Posted by djxb2000-1 on 21 Dec, 2015 10:29 PM

    djxb2000-1's Avatar

    But the system is forcing me to enter a fee expense category for the commission and it is appearing as an expense.

  5. 5 Posted by dwg on 22 Dec, 2015 07:32 PM

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    Perhaps a screen shot showing what is happening may help us understand what is going on.

  6. 6 Posted by Tom Freeman on 22 Dec, 2015 08:41 PM

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    You can enter your transactions in two ways.

    The first is you enter 250 shares and the $103 price, then you put in the fee of 8.95. for a transaction total of $25758.95.

    The other is you just in 250 shares and the total transaction cost of 25758.95, MD will calculate the cost per share as 103.0358.

    The cost basis remains the same, the evaluation metrics stay the same. Its all about keeping track of your commissions. And most downloads of transactions will include the trading commission as separate line item.

    If the issue of concern is that the commissions show upon the income and expense report, (the expenses is actually trapped in the asset value) then you can toggle this specific category off on the report.

    I do wonder why it is recorded in the report when the rest of the transaction isn't. I will query the lead developer why this is so.

    Tom Freeman
    Infinite Kind Support

  7. 7 Posted by djxb2000-1 on 26 Dec, 2015 09:35 PM

    djxb2000-1's Avatar

    I can certainly live with the expense category. It's not really a problem. I just wanted to make sure I understood what was going on. It was confusing.

    You can close this, and thanks for your help.

  8. Ben Spencer closed this discussion on 26 Dec, 2015 10:03 PM.

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