HAL9000
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Re: Handling a share portfolio
DuncanS Julie_A_C I can't delete my last post, but please ignore it as I think I have this figured out. To be sure though, here are 3 screenshots from my test file: Step 1) This is the original share purchase from Duncan's example. I have purchased 10,000 shares @ $1.00 in a company called COY, with $30 brokerage on the purchase. (I know the purchase brokerage doesn't need to be separated out, but I like to do so anyway.) Step 2) This where I have sold 4000 shares @ $1.50, with $30 brokerage on the sale. Because I had originally bought those 4000 shares for $1, $4000 is the value I enter on the first line. (The Memo for that line annotates the original purchase date and value). The second line is the brokerage, shown as a negative. The last line is automatically showing $2000, being the profit. Finally, here is my accounts list, showing the original value of $10,030 now reduced down to $6030, as I would expect. My first question is, of course, "have I done everything correctly?" Other than that, I would appreciate advice (perhaps by way of a screenshot if that's easy enough) showing what I should annotate in the General Journal entry? Thanks, Hal29KViews0likes0CommentsRe: Handling a share portfolio
Thanks Duncan. Is there a step missing before we do the Journal Entry, ie. how do we complete the Receive Money window for the example transaction? (I suspect there is supposed to be both a positive entry and a negative entry in that window but figuring it out is doing my head in...) Rightly or wrongly, my head says that after the Receive Money and the Journal Entry, the final value of the Asset account ought to be in the order of $6000? I'm basing this on it having been $10,030 before the sale (the $30 being the brokerage on the purchase), and we've sold just 4000 of the shares that were originally bought @ $1 each. Cheers, Hal DuncanS Julie_A_C29KViews0likes0CommentsRe: Handling a share portfolio
DuncanS Julie_A_C Duncan, You wrote above: "As you mention, Receive Money is used for Sale of Shares. The total receipt is posted to the Asset Account. From the Purchase and Sale Contract Notes, you calculate the Capital Gain/Loss. If all the holding is sold, by default, the asset account is nil." This has been working well for me until recently I needed to record a sale of only a part of a holding. How do I do that? In this case, I need to end up with the asset account not being nil. Cheers, Hal.29KViews0likes0CommentsRe: Handling a share portfolio
Just a couple of points of clarification that have come to light wrt my method above: 1) If following that method of recording the disposal of shares to the letter, you'll be left with the original brokerage still left in that share's asset account after disposal. So this from above: Allocate the number of shares sold x the original cost to that share's asset account, with the memo '#sold x original$ paid' Allocate the brokerage to Profit/Loss on Shares as a negative, with the memo being eg. 'brokerage on Rio sale' Should be replaced by: Allocate the number of shares sold x the original cost plus the brokerage on the purchase to that share's asset account, with the memo '#sold x original$ + purchase brokerage' Allocate the brokerage on the sale to Profit/Loss on Shares as a negative, with the memo being eg. 'brokerage on Rio sale' 2) The ATO apparently does not dictate that the disposal of shares purchased on different occasions needs to be on a first-in-first-out basis. You can nominate this yourself, but one needs to keep a journal noting which shares were sold, so that capital gains/losses can be calculated accordingly. I hope I've got all that right! Julie_A_C DuncanS SupportNoteGuy32KViews0likes0CommentsRe: Handling a share portfolio
DuncanS Julie_A_C SupportNoteGuy OK thanks Duncan - as I read it, that aligns with the method I'm proposing above (the only difference being that I've called my Other Income account 'Profit/Loss on Shares' instead of 'Capital Gains/Losses'). I'll proceed on that basis.33KViews1like0CommentsRe: Handling a share portfolio
DuncanS Julie_A_C Time for me to start accounting for share sales and buybacks now... I don't think I need to account for CGT or discounts as my accountant handles all of that outside MYOB. To keep things simple, I think I only need to account for actual money in/out of the accounts. This is the process I anticipate - what do you think? Create an 'Other Income' account called 'Profit/Loss on Shares' When shares are sold, record a Receive Money transaction: Allocate the number of shares sold x the original cost to that share's asset account, with the memo '#sold x original$ paid' Allocate the brokerage to Profit/Loss on Shares as a negative, with the memo being eg. 'brokerage on Rio sale' Allocate the remainder to Profit/Loss on shares as a positive (or a negative if they were sold at a loss) with the memo being, eg. 'profit on Rio sale' eg. if 50 Rio shares were sold at $100 each, with brokerage of $20, and the original price paid was $75 each: Allocate (50 x $75) to the Rio asset account, memo '50 x $75' Allocate -$20 to Profit/Loss on Shares, memo 'brokerage on Rio sale' Allocate the balance (should equal 50 x $25) to Profit/Loss on Shares, memo 'profit on Rio sale' Notes: If the shares were purchased on different occasions, sales to be allocated on a FIFO basis. For share buybacks, where there is no brokerage, I imagine the method would be the same as above? How's that look?33KViews0likes0CommentsRe: Handling a share portfolio
Thanks Duncan, I've re-entered all the data using the method I proposed above, with the addition of your suggestion to use just a single Customer card for 'Equity Purchases'; and another single Supplier card for 'Equity Distributions'. Thanks for your reply above - it seems that those two cards might be redundant in my case, and I have indeed recorded detailed memos for each purchase (eg. "45 @ $100.43; 15 @ $100.45") in each 'Other Asset' account transaction. As I've started using those 2 cards in that particular database I may as well continue to do so. But when I start re-entering data in my second database, I may as well leave them out. DuncanS Julie_A_C Thanks very much to you both for your help with all this, without which I could not possibly have got this far! My next step (soon) will be to learn how to record share sales (this was not required for FY2017, but is required for FY2018), and Julie has touched on this in a couple of posts above, though I will no doubt need to return here for some more clarification at the time.34KViews0likes0CommentsRe: Handling a share portfolio
DuncanS Hi Duncan, I'm about to start re-entering all the data, and will use a card for 'Dividends' and one for 'Share Purchases' as you suggest, but I would like to understand just why this is required. What difference will it make whether I use cards for this or not?34KViews0likes0CommentsRe: Handling a share portfolio
@HAL9000 @Julie_A_C Thanks Duncan - if I were to use Cards then I would definitely just be using one for 'Dividends' and one for 'Share Purchases', rather than going to the extent of using one for each company. But I still don't understand the need for this. What information can it give me that I would not already have without using those cards?35KViews0likes0CommentsRe: Handling a share portfolio
Hi Julie_A_C - Ah, so that's what it means! In case it's pertinent - I do not provide my accountant with any info electronically - all he works from are the P&L and Balance Sheet which I print out for him. So since the ATO will already know all about my dividends, I can only assume that providing this info to the accountant serves as some sort of check/audit. I'm still confused as to the need for a Customer Card for Dividends. Either way (with or without the Customer Card) whenever I record a dividend payment, I would note in the "Memo" field which company paid that dividend. Since the accountant isn't asking for any more info than the totals for Franked/Unfranked/Other, I can't see what extra information could be gleaned through having a Customer Card, compared to just recording the dividend without one?35KViews0likes0Comments