Investment Setup

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sojorner
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Joined: Wed May 03, 2017 2:01 pm

Investment Setup

Post by sojorner »

this is a reply / question to neil on the original post: Re: Investment Distribution
Postby NeilZ » Thu Apr 14, 2016 11:23 am

I've been reading through the posts on unrealized gain loss to better understand how to report this so that the asset value stays current with the latest reports. I came across this one and it seemed to validate what i had been thinking regarding unrealized gains / losses.

In this post you indicate that for Unrealized gain-loss, you should have an account set up. and you show the setup as developed by another individual. Part of that shows an income account for unrealized gains/losses, but then at the bottom you state: ? you should not report that as actual income since the church has not yet realized the gain-loss.

I was good all the way up to that last statement. If I record the transaction in an income account, it will show up in the Income-Expense report - hence 'real' income. How do you keep it from showing up as real income on the statement?

Thanks

NeilZ
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Location: Dexter NM
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Re: Investment Setup

Post by NeilZ »

sojorner wrote:this is a reply / question to neil on the original post: Re: Investment Distribution
Postby NeilZ » Thu Apr 14, 2016 11:23 am

I've been reading through the posts on unrealized gain loss to better understand how to report this so that the asset value stays current with the latest reports. I came across this one and it seemed to validate what i had been thinking regarding unrealized gains / losses.

In this post you indicate that for Unrealized gain-loss, you should have an account set up. and you show the setup as developed by another individual. Part of that shows an income account for unrealized gains/losses, but then at the bottom you state: ? you should not report that as actual income since the church has not yet realized the gain-loss.

I was good all the way up to that last statement. If I record the transaction in an income account, it will show up in the Income-Expense report - hence 'real' income. How do you keep it from showing up as real income on the statement?

Thanks
When I replied to that topic, I had setup my local system that way, after that reply I realized at the end of the year that it was showing as income, and should not be. Then I realized that that transaction would work for received distribution from interest, but not for unrealized gains or losses.

I now use the following transaction to handle this.

In the CoA, I have setup EF-1330-000 Mutual Fund, and EF-1335-000 Mutual Fund Gain/Loss. I also added a new Fund Balance/Net Assets account EF-3115-000 Unrealized Gains/Losses .

When I receive the mutual fund statement, I use the following transaction for Unrealized GAINS:

EF-1335-000 DB 1000.00
EF-3115-000 CR 1000.00

This correctly reflects the unrealized gains, and is properly shown on the Balance Sheet, not on the I&E report.

If there's a loss, and I fully expect one this quarter, I would enter the following for the LOSS

EF-1335-000 CR 1000.00
EF-3115-000 DB 1000.00

I hope this helps.
Neil Zampella

Using PC+ since 1999.

sojorner
Posts: 21
Joined: Wed May 03, 2017 2:01 pm

Re: Investment Setup

Post by sojorner »

Neil,
Thanks. I had seen it reported as income by several accounting sources when I researched it on the internet and only a one showed it as an equity income account. I too was having a problem with it showing up on the Income-Expense account and adversely affecting the results. Reporting as part of an equity account makes more sense. Thank You.

Doug

cbrown
Posts: 94
Joined: Sun Dec 21, 2014 7:50 am

Re: Investment Setup

Post by cbrown »

Neil, using your example it seems to me that the fund balance for EF-1330 would never show the current book value of the asset? All your transactions are to 1335 and 3115. How does 1330 ever show the current book value of the asset? I must be missing something. Thanks.

NeilZ
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Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
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Re: Investment Setup

Post by NeilZ »

cbrown wrote:Neil, using your example it seems to me that the fund balance for EF-1330 would never show the current book value of the asset? All your transactions are to 1335 and 3115. How does 1330 ever show the current book value of the asset? I must be missing something. Thanks.
The book value is shown in the Balance Sheet under assets. The Net Assets part of the balance sheet (really the fund balances) shows the unrestricted fund balance accounts which includes the mutual fund. We then do an end of year transaction when we receive the final year end statement from the mutual fund giving the full book value, and move the unrestricted gains/losses to the unrestricted net assets.

Until then, both 3110 & 3115 are listed together, and the total equals the book value. In this manner, we can tweek the 3115 account during the year to account for value fluctuations. It helps us to see how the mutual fund account is doing for the year at a glance.
Neil Zampella

Using PC+ since 1999.

cbrown
Posts: 94
Joined: Sun Dec 21, 2014 7:50 am

Re: Investment Setup

Post by cbrown »

Makes sense. Thanks.

UUTallahassee
Posts: 1
Joined: Tue Mar 11, 2014 11:10 am

Re: Investment Setup

Post by UUTallahassee »

Good evening, Neil.

Regarding your post of January 30, 2019 in response to sojourner about handling gains and losses in mutual fund accounts:

You state that when you "receive the final year end statement from the mutual fund giving the full book value," you "move the unrestricted gains/losses to the unrestricted net assets." Query: Which accounts do you debit and credit to accomplish this?

Our church does not have an unrestricted mutual fund but does have several mutual funds as part of our permanently restricted endowment assets. We have line items in Powerchurch for each of two endowments in assets (1410-151 and 1411-151), and another single equity account showing the total of these two assets (permanently restricted account #3301-151).

Per your suggestion in 2003, I have set up a new asset and a new equity account devoted to endowment gains and losses (1412-151 and 3302-151).

If gains and losses are tracked in both the asset and equity accounts devoted to that purpose, how, again, are the year-end balances reflected and in which accounts?

Any help would be greatly appreciated!

Ev in Tallahassee, Pch user since 2014

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
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Re: Investment Setup

Post by NeilZ »

UUTallahassee wrote:Good evening, Neil.

Regarding your post of January 30, 2019 in response to sojourner about handling gains and losses in mutual fund accounts:

You state that when you "receive the final year end statement from the mutual fund giving the full book value," you "move the unrestricted gains/losses to the unrestricted net assets." Query: Which accounts do you debit and credit to accomplish this?
Debit the Gain/Loss Equity and Credit the Unrestricted Net Assets. Understand, that we keep our endowments separate from our Operations, and this is done in the Endowments Accounting Fund.
Our church does not have an unrestricted mutual fund but does have several mutual funds as part of our permanently restricted endowment assets. We have line items in Powerchurch for each of two endowments in assets (1410-151 and 1411-151), and another single equity account showing the total of these two assets (permanently restricted account #3301-151).

Per your suggestion in 2003, I have set up a new asset and a new equity account devoted to endowment gains and losses (1412-151 and 3302-151).

If gains and losses are tracked in both the asset and equity accounts devoted to that purpose, how, again, are the year-end balances reflected and in which accounts?

Any help would be greatly appreciated!

Ev in Tallahassee, Pch user since 2014
The year end balances are updated in both the asset & equity. We then move the g/l equity amount to the main equity account. In our case, its the unrestricted net assets in the Endowment Accounting Fund. From what I can see in your case you'd move the g/l amount to the 3301- equity.
Neil Zampella

Using PC+ since 1999.

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