Sorry, hadn’t realised the above banner was a Video - have now watch it and aren’t convinced if that’s the correct approach as you aren’t dealing with COG
However, that doesn’t mean that or some other system can’t be used. One would just have the option of using it or not - in my case, I prefer the separation as it provides better management outcomes, others may not.
Probably FIFO if I was pushed for a choice
This worked 
. Thank you, @Brucanna. I am still facing problem with capital gain. As system is currently using perpetual model for COGS, capital gain is based on average cost. While in my case it must be FIFO. Due to this, my capital gain and value of inventory results incorrect.
As per the law here (India), it must be FIFO.
The solution here is not to put all your trades for a company into a single Inventory Item. So if you buy and hold the same company three times, you will have three Inventory Items, then you will always have FIFO.
However, if you buy and sell a company back to a zero holding, then if you re-buy, you could recycle an Inventory item.
Have you done any modelling comparing the results between average cost and perpetual models.
If yes, are you able to post a screenshot showing the comparable results, thanks
@lubos - @shah_p_r situation kind of reinforces the previous observation " that each purchase and DRP should be a separate inventory item and not combinable into a single inventory item - or perhaps they could become automatic sub-items within an inventory item so there can be a global view of a company’s qty and average cost.
@Brucanna Thanks, this worked perfectly.
I did try perpetual model. That worked fine till I sell all the inventory before buying same stock again. Capital gain results incorrect when you sell partial stock bought as multiple prices. Sorry, I do not have model now.
@lubos, I think having option to choose how to calculate cost should resolve this. For taxation, we also need to segregate long term and short term gain. Having option to transfer (journal/payment/receipt) this profit to another heads will help. Else we can do that outside Manager.
In the latest Manager editions you can now specify per inventory item an income account.
So you could default all initial inventory purchases to short term and then if long term is required, change the inventory item to suit
@lubos & @shah_p_r
With the inclusion of Custom Income/Expense account you can now resolve (fudge) the COGS issue by making them both the same account.
If on disposal there is a trading profit or loss - then make them both either Profit on Sale or Loss on Sale, then the nett position is in the one account. Similarly for capital gain or loss.
The only other issue is the brokerage on disposal it can’t be deducted from the proceeds as “freight out”