Asset sale

sale of asset (shares) I listed the sale as a bank transaction, (ie) receive money in account.
I listed the asset “ABC” shares, and put the brokerage as -$

All looks good, except the profit I made shows as a (-) in the asset list.
The money $ shows up in the bank account , which is part of the same company.
is the correct way to record the asset sale ???

Thanks

Your message is kind of cryptic but, from what I understood, you have made one line in the receipt which credits the asset account.

You should have two lines to do this:

  1. Asset account at its carrying value
  2. Income account at the difference between selling price and carrying value.

Thanks for the reply, I will try to explain what I have done, (I think it is OK)
Bank accounts -> Com bank
Purchased “ABC” shares through “Com bank account”. $100.

action -; In bank account transaction, “spend money” Three lines 1 cost of shares

2 brokerage cost

3 GST (tax)

I listed the shares under Assets -> Shares -> “ABC”

SIX MONTHS LATER I sell the shares “ABC”

Bank accounts -> Com bank

Sell “ABC” shares through “Com bank account”. $150

action -: In bank account transaction, “receive money” Three lines 1 cost of shares

2 brokerage cost

3 GST (tax)

In the summary of company , under Assets -> Shares -> “ABC” shares are listed at $-50

the money in Com bank accounts all balance , its only the (-) sign in the summary that concerns me.

Thanks for your comments and help, I appreciate all input

Anthony Caldwell

If I understand correctly, your receipt of money line

1 cost of shares

is the amount you sold the shares for. It sounds as if you coded this amount directly to the “ABC” account.

If so, you will want to adjust that line to the amount you were carrying the shares at (likely the amount you paid for them). You would then add a 4th line to the receipt for the difference between what you sold the shares for and what you paid for them; this is your gain or loss.

This 4th line should be coded to a Revenue or Expense account (typically titled "Gain(Loss) on sale of …). This will dispose of the asset, record the gain to your income statement, and result in the bank account increasing by the amount of cash you received.

@ACE1305, these terms suggest you are using an obsolete version of Manager. None of them is used any longer. You should update your software, or the Guides and discussion on the forum will not make sense to you.

You should be listing your purchases under Inventory Items not as an individual asset account.
Then when you sell the profit/loss will transfer to the P&L and not remain on the Balance Sheet.

Read these topics

I would advise against this. Unless securities trading is the primary business, marketable equity securities (“available-for-sale securities”) do not meet the IFRS or US GAAP definition of Inventory; this approach would likely not be acceptable for most businesses.

Generally, marketable equity securities should be presented as their own asset account (and marked to fair value).

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You are taking the term “Inventory” to literary.

For example - I could re-name the Inventory on-hand account to be Securities Holding and still give each security owned its own Item code under that account name.

Hi @Brucanna,

Allow me to clarify; I was speaking in general terms. I do not mean to say one cannot account for securities as inventory (the IFRS and US GAAP definitions of Inventory can cover a range of tangible and intangible assets), only that the businesses where this treatment would be appropriate would be limited, and not suitable for most.

In the case of a securities trader, your example would be workable.

But in the case of a retailer that holds marketable securities, their inventory would be their retail merchandise and they could not co-mingle the inventory and the securities; the assets would require separate accounting, presentation, and reporting treatments under the major standards.

So I advise against this not because I feel you are in error, but as a caution to other users who may infer treating securities as inventory is acceptable in all situations; there are qualitative factors that must be considered before determining if certain assets should be treated as inventory.

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Yes, and that is what Manager provides via control accounts. As an example, a business may require separate accounting and reporting treatments between raw materials and finished goods and these can be unrelated. By that I mean, the raw materials could be vehicle spare parts and the finished goods are unsold vehicles yet both components are recorded under Inventory Items.

The above business may have raw materials, finished goods as well as securities.
These are all recordable under Inventory Items as long as you structure accordingly.

The balance sheet via control accounts can document this separation which allows each sector to be market adjusted according to their circumstances.

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