Negative balance in investments

[Joel_Vandergriendt]

Hi, I’m seeing something I don’t understand. It seems similar to Balance Sheet Report - investment asset not tally but that says it was fixed.

It is pretty simple to reproduce.

1. Create a new company
2. Add a new cash account with a starting balance of $1000
3. Create an Investment (I called mine Ford (F) )
4. Create a payment to Buy 10 shares of Ford for 90 dollars a few days ago.
5. Create receipt to Sell 10 shares of Ford for 100 dollars a few days later.
6. look at the balance sheet.

Should investments show $-10 I don’t understand

[lubos]

It’s the presence of Investment Market Price entry that triggers revaluation.

See: https://www.manager.io/guides/investment-market-prices

But I see your point. If quantity is zero, then it doesn’t even matter what is its market price because the investment value will be always zero.

I will improve it so it works like that.

[Joel_Vandergriendt]

So am I expected to create a market price at every buy or sell of every investment?

I was under the impression that market prices were only for unrealized gains.

[Patch]

@Joel_Vandergriendt
When no Market data is entered the Balance sheet Investment account shows Closing Balance (of the actual share transactions account). In contrast when Market pricing data is entered this account just shows Quantity owned x Latest market price.

Your problem is Manager does not automatically calculate realised gains/loss. You have to do that manually. Please check your jurisdictions legal requirements. I suspect you will be legally required to calculate realised gain / loss when selling shares by:

• nominating what parcel(s) of shares you are actually selling and enter the actual purchase price and quantity for each parcel (or component of the parcel) being sold. Allocate this to the Balance sheet account
• Use a receipt (or sales invoice) line for each parcel as above
• Assign any residual from the sale to a profit & loss “Realised capital gain/loss” account

@lubos

If quantity is zero, then it doesn’t even matter what is its market price because the investment value will be always zero.

No the primary purpose of accounting software is to track actual real accounting transactions. Accounting software can be used for forecasting and budgeting tasks but that is a secondary function.

When an error in data entry occurs it is very valuable for accounting software to highlight the error rather than hide it.

@Joel_Vandergriendt

So am I expected to create a market price at every buy or sell of every investment?

If you are comfortable with Manager overwriting our your actual investment purchase and sales data with (qty x last entered market price) then entering market prices in Manager works well.

If tracking actual investment purchases and sales data is important to you, then

• removing all market prices / unrealised gain/loss pricing from Managers setting is currently the best way of achieving this (note the actual realised gain is a taxable item in most jurisdictions so it is vital it is accurate).
• If desired unrealised gain can then be re-incorporated via a journal entry between unrealised gain custom profit/loss and Balance sheet accounts (note this quantity is not taxable and in the few occasions it is reportable, it is always reported separately to realise gains hence calculation is optional).

[lubos]

@Patch there is Realized Investment Gains Summary report which will give you realized profit / loss figures so you don’t have to calculate your realized investment gains or losses manually.

But you will need to make manual journal entry if you want to see the split on your profit & loss statement.

[Patch]

No that approach is OK for a trading portal dashboard but is not functional for Accounting software.

For monitoring investments from an accounting perspective, exactly the same functionality is required as Assets and their associated depreciation.

• Actual purchase data is tracked in a summary page account
• Optionally depreciation (aka Market price adjustment) can be estimated using revaluation or a jurisdiction specified rate. The adjustments do not overwrite the “At cost” account
• On sale of the asset the actual asset Loss/gain calculated and entered into a profit & loss account. This is calculated from data in the “at cost account”. If the optional estimated depreciation (aka Market price adjustment) adjustments had been entered, these entries are reversed

This is also what the end of year trading portal report shows.

[Patch]

@lubos

if you want to see the split on your profit & loss statement.

There is no jurisdiction where realised capital gain/loss is treated the same in accounting reports as un-realised gains/losses.

There is no jurisdiction where combining the primary accounting records for realised an un-realised gains/losses is appropriate. Sure summing them as an intermediate value is useful just as calculating book value of an asset is useful but that does not mean the component ‘at cost’ and depreciation / asset revaluation adjustments are not essential.

[Patch]

@lubos Is there a reason the Investment tab and Investment Control accounts is not able to show all essential investment data?
In particular, drill down on the system generated Profit and Loss Investment gains (losses) account shows

• Closing Balance and Gain / Loss
• in addition to Investment, Qty, and Market value

Given Closing Balance shows actual accounting transactions, it is essential information for all users in all jurisdictions. Please consider adding this information to the Investment tab and Investment Control accounts.

There also appear to be a naming inconsistency between

• The Fixed assets Acquisition cost and
• Investments Closing Balance

These two items contain the same thing but are given different names. Would it be possible to standardise on one name?

@lubos

there is Realized Investment Gains Summary report

That uses average investment value to calculate realised gain/loss

• Australia: the ATO explicitly states capital gains MUST be calculated by tracking individual share lots and nominating how much of each is sole when selling shares https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/shares-and-similar-investments/keeping-records-of-shares-and-units
• USA: similar to Australia, when shares are sold the tax rate depends on how long each sold lot has been held for, it’s initial purchase price. The tax payer is entitled to optimise their capital gains payable by tracking which lot is actually sold Versus purchase https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States Investors can also choose basic methods like FIFO (first-in, first-out) or Dollar-Value LIFO (last-in, first-out) to calculate gains, affecting tax outcomes. https://www.forbes.com/councils/forbesfinancecouncil/2025/03/28/maximizing-what-youve-earned-adding-value-beyond-the-portfolio/
• UK: Average share price is used https://www.gov.uk/tax-sell-shares/same-company

In all cases the realised capital gains is a property of and specific to each actual sale transaction. As a result this accounting data must be attached to the investment sale transaction.

In every case the realised investment gain/loss is treated very differently to unrealised gain/loss. Any miss appropriation between realised and unrealised gain/loss is an accounting error which has a direct effect on income tax payable, so has very significant financial and legal implications.

As a result the Realized Investment Gains Summary report is simply wrong in many jurisdictions and an inappropriate approach in all jurisdictions.

Imo in a general purpose accounting program it is not unreasonable the user identifies and enters purchase price data on the sales transaction. In Manager this can currently be done on the share sale transaction by

• Entering the sale amount as a Fixed total
• Enter share PURCHASE Unit price. For UK this is the average unit price (Closing Balance / Qty). For other jurisdiction it is actual purchase unit price of each lot currently owned (which requires the user to track what they have actually bought sold in the past)
• Enter desired quantity of each lot being sold. Ensure total quantity equals the total shares being sold
• Add a line item for realised capital gain/loss. Select an appropriate Profit and Loss account. Enter the balancing amount for this sale transaction

While it would be nice for Manager to automate share lot tracking but it is not unreasonable this is deferred. Perhaps to be reconsidered if lot tracking of Inventory items is added in the future (a vaguely similar problem).

In the interim documenting how to record investment sales in Manger is probably adequate. The current system Profit and Loss Investment gains (losses) account should be renamed Investment unrealised gains (losses)

To illustrate

As an example of a share sale transaction consider

Date	Transaction	Qty	Unit price	Total
1 Feb 2021	Buy Share 1	100	$85.00	$8,500
2 Feb 2025	Buy Share 1	100	$146.00	$14,600
16 Mar 2025	Sell Share 1	100	$135.00	$13,500

When entering the sales transaction into Manager the user specifies exactly how much of each lot is being sold.

• FIFO: Taxed realised capital gain $13,500 - 100 x $85 = $5,000
• LIFO: Taxed realised capital gain $13,500 - 100 x $146 = -$1,100 (ie realised capital loss $1,100)
• or a mixture of lots can be chosen to minimise the tax payable such as $13,500 - (19 x $85 + 81 x $146) = $59
• Note in the UK enter Average unit price = Closing Balance / Qty = $23,100/200 = $116 → Capital gain $13,500 - 100 x $116 = $1,950

In Manager the receipt is entered as shown below (for a mixed lot required declaring only $59 taxable realised capital gain)

Which shows on the summary page

Looking at the Profit and Loss report in particular the last 5 comparator columns which all show changes from the start of the current financial year to various times within it, note

• Immediately prior to the share sale on 15/03/2025 the shares had loss $100 ie the unrealised gain for that period was ($100). After the sale on the 16/03/2025, a gain of $59 was realised which was exactly balanced by the unrealised gain going further negative to ($159). Which is the expected behaviour, a sale of stock valued at market price only coverts unrealised gain (loss) to realised gain (loss).

The Balance sheet report reflects the same behaviour ie the retained earnings does not change on stock valued at market price being sold.

For more details see attached Manger business file.
Note for the current financial year, to examine what Manager is actually doing

• multiple Profit & loss as well as Balance sheet reports have been defined
• Share price is artificially updated the day prior to the transaction days price
  Test Investments 06 Investment tab - Realised + Manager Market (2025-03-30).manager (36 KB)

[Joel_Vandergriendt]

Thank you patch, this is extremely helpful. I need to study it to totally figure it out.

[Patch]

@lubos
When an investments quantity running total is zero the Closing Balance for that investment becomes no longer user accessible in Manager v25.4.3.2227
As a result it is no longer possible for a user to get a drill down on this account to audit actual investment transactions (or audit realised gain calculations).

As this is essential information, I suppose users could ensure the quantity never goes to zero (by artificial adding a 0.001 quantity error (which does work but is not a good solution).

Please reinstate Closing Balance / Acquisition cost in the Investment tab (and Investment Control accounts)

Showing the sum of the “Qty” column on this drill down would also be very useful. Use case

• When selling an investment the date and other lot purchase data is best entered into the line description field (for each purchase lot being sold)
• All transaction for a lot can then be shown by searching in the Closing Balance drill down for lot purchase date (or other lot identifier)
• Showing the sum of qty on this drill down search then shows residual quantity for that share lot