Inventory Value Adjustment

Hi all,

Would like to know if there is any way to increase my stock value or decrease my stock value on monthly basis?
As am using this concept for securities/unit trusts/crude oil investment in as part of inventory valuation.
This would affect my realised and unrealised gain/loss in my investment. This concept is similar to gain/loss in foreign exchange.

Please enlighten me.

The solutions depends on
a) do you want to reflect just the Investment re-valuation - the movement in the paper value, or
b) do you want to reflect the “unrealised” gain/loss as Income

The recommendation would be (a), otherwise if you use your P&L for tax return purposes (actual gains/losses), then the inclusion of unrealised transactions could cause you problems.

To do (a), under BS Assets create an “Investment Holdings - Market Value” account and under BS Equity create an “Investment Holdings - Revaluation” account. Then via Journal you would post the month end unrealised gain/loss between these two accounts. At each month end you would edit the previous month journal by changing the date and the new revaluation amount

The Assets would look like this

The Equity would look like this

This way only actual gains & losses are reflected in the P&L and the paper gains & losses are reflected in the BS

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So let’s say an investment is made. 27 shares are purchased at $150 per share. This is entered into the “Investment Holdings - Acquisitions” asset account, showing that $4,050.00 was taken from the bank account.

A month later, the price per share has gone up and is now $153 per share. Please explain what you do to reflect this change.

In accounting terms - nothing as no accounting transaction has occurred.
Just the same with a supplier of products. You purchase the product for 10.00, next month the supplier is selling the same product for 12.00. You don’t change your accounts for this change in price and the same applies to shares - the supplier was the stock market.

However, if want to reflect a re-valuation of an asset then use the solution provided in the post above. A re-valuation is only reflected in the Balance Sheet.

But a note of caution, as share prices vary daily, you generally would only do a re-valuation at year end, and then only if there has been a significant change - 150 to 153 is not a significant change.

The 153 was just a fictitious example. I was trying to understand how you actually use the 4 accounts within Manager. You said “via journal”. So I am guessing that you would do as follows:
27 x 153 = 4131 = new value of investment.
4131 - 4050 = 81 = change in value of investment.
So then presumably you do a journal entry as follows:
Investment Holdings - Market Value Adj ~ Debit 81.
Investment Holdings - Revaluation ~ Credit 81.
And then you can edit this journal entry every time you want to reflect a change in the value of the investment in the balance sheet.

Is that what you meant?

I guess this works, but you have to do the math every time… there is no way to simply edit the price per share anywhere within Manager in order to instantly reflect the new value. So if you had a lot of stocks, for example, it would get rather tedious to do the math every time for each stock. The journal mechanism doesn’t offer separate “Quantity” and “Unit price”, like a regular payment does.

Yeah, there is no module for that yet but I’m working on it.

This “stock adjustment” functionality will be fabulous for our Investment portfolio!

Sounds like a different sort of depreciation schedule worksheet to me. Where final value is entered by the user instead of change.

Yes

I am assuming that your broker provides you with a portfolio valuation, therefore, you just use the difference between your “Investment Holdings - Acquisitions” account balance and the broker’s portfolio valuation as the journal value.

This is beautiful.
Thanks so much!