How to create an asset with a reduced value compared to my regular currency (dollars)

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How to create an asset with a reduced value compared to my regular currency (dollars)

adrian
I bought a $500 gift card for $430 this week.  I would like to add this to gnucash as some kind of asset so that as I spend it, the correctly scaled amount gets transferred to the expense account I use.  In other words, if I spend $100 from this account it's really only $86.

I tried to do this by creating a security fund and then using the price editor to set the price to 0.86.  But when I insert a transaction from the new account to an expense account, it doesn't apply the 0.86 factor.   What is the right way to do what I want to do?

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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Christopher Lam
This sounds like an overkill. I'd write the original purchase as:

Asset:Bank -$430
Asset:GiftCard: $500
Expense:Rebates -$70

Whereby Expense:Rebates generally collects anything that was purchased at a
discount, and I wish to record the original price as well as the discount.
So, a discounted laptop could be recorded as:

Asset:Bank -$900
Expense:Electronics $1000
Expense:Rebates -$100

Other strategies are valid.

On 30 November 2017 at 23:11, Mariano, Adrian V. <[hidden email]> wrote:

> I bought a $500 gift card for $430 this week.  I would like to add this to
> gnucash as some kind of asset so that as I spend it, the correctly scaled
> amount gets transferred to the expense account I use.  In other words, if I
> spend $100 from this account it's really only $86.
>
> I tried to do this by creating a security fund and then using the price
> editor to set the price to 0.86.  But when I insert a transaction from the
> new account to an expense account, it doesn't apply the 0.86 factor.   What
> is the right way to do what I want to do?
>
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RE: How to create an asset with a reduced value compared to my regular currency (dollars)

adrian
I normally record rebates as offsets against the original purchase, so in your example below I would do it as:

Asset:Bank -$1000
Expense:Electronics $1000

And then when the rebate arrives:
Expense:Electronics -$100
Asset:Bank: $100

I don’t try to record the undiscounted prices of things, since I consider them basically irrelevant.  In many (most?) cases, original “undiscounted” prices are fictitious values whose purpose is to anchor the price so you feel better about the price you’re actually paying.   I’ll grant that for a $70 discount perhaps what I’m trying to do is overkill---but it seems like that depends on how much work it is to do it.   If what I tried so far worked it would have been pretty easy, just a few clicks more work than establishing a normal Asset:GiftCard account.  So why not do it right?   And now that I have run into trouble creating the account that has a 15% discount, I’m curious about how it can be done at all.   Is it indeed a simple matter to set it up the way I wanted?



From: Christopher Lam [mailto:[hidden email]]
Sent: Friday, December 1, 2017 3:21
To: Mariano, Adrian V. <[hidden email]>
Cc: [hidden email]
Subject: Re: How to create an asset with a reduced value compared to my regular currency (dollars)

This sounds like an overkill. I'd write the original purchase as:

Asset:Bank -$430
Asset:GiftCard: $500
Expense:Rebates -$70

Whereby Expense:Rebates generally collects anything that was purchased at a discount, and I wish to record the original price as well as the discount. So, a discounted laptop could be recorded as:

Asset:Bank -$900
Expense:Electronics $1000
Expense:Rebates -$100

Other strategies are valid.
[https://ssl.gstatic.com/ui/v1/icons/mail/images/cleardot.gif]

On 30 November 2017 at 23:11, Mariano, Adrian V. <[hidden email]<mailto:[hidden email]>> wrote:
I bought a $500 gift card for $430 this week.  I would like to add this to gnucash as some kind of asset so that as I spend it, the correctly scaled amount gets transferred to the expense account I use.  In other words, if I spend $100 from this account it's really only $86.

I tried to do this by creating a security fund and then using the price editor to set the price to 0.86.  But when I insert a transaction from the new account to an expense account, it doesn't apply the 0.86 factor.   What is the right way to do what I want to do?

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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Ronal B Morse-2
Adrian, is there a reason you treat the rebate as a negative expense
instead of miscellaneous (non-taxable) income?  To me, the rebate is
something you get rather than something you don't give, but my analysis
could be incorrect, and if it is I'd like to know.

RBM


On 12/01/2017 06:02 AM, Mariano, Adrian V. wrote:

> I normally record rebates as offsets against the original purchase, so in your example below I would do it as:
>
> Asset:Bank -$1000
> Expense:Electronics $1000
>
> And then when the rebate arrives:
> Expense:Electronics -$100
> Asset:Bank: $100
>
> I don’t try to record the undiscounted prices of things, since I consider them basically irrelevant.  In many (most?) cases, original “undiscounted” prices are fictitious values whose purpose is to anchor the price so you feel better about the price you’re actually paying.   I’ll grant that for a $70 discount perhaps what I’m trying to do is overkill---but it seems like that depends on how much work it is to do it.   If what I tried so far worked it would have been pretty easy, just a few clicks more work than establishing a normal Asset:GiftCard account.  So why not do it right?   And now that I have run into trouble creating the account that has a 15% discount, I’m curious about how it can be done at all.   Is it indeed a simple matter to set it up the way I wanted?
>
>
>
> From: Christopher Lam [mailto:[hidden email]]
> Sent: Friday, December 1, 2017 3:21
> To: Mariano, Adrian V. <[hidden email]>
> Cc: [hidden email]
> Subject: Re: How to create an asset with a reduced value compared to my regular currency (dollars)
>
> This sounds like an overkill. I'd write the original purchase as:
>
> Asset:Bank -$430
> Asset:GiftCard: $500
> Expense:Rebates -$70
>
> Whereby Expense:Rebates generally collects anything that was purchased at a discount, and I wish to record the original price as well as the discount. So, a discounted laptop could be recorded as:
>
> Asset:Bank -$900
> Expense:Electronics $1000
> Expense:Rebates -$100
>
> Other strategies are valid.
> [https://ssl.gstatic.com/ui/v1/icons/mail/images/cleardot.gif]
>
> On 30 November 2017 at 23:11, Mariano, Adrian V. <[hidden email]<mailto:[hidden email]>> wrote:
> I bought a $500 gift card for $430 this week.  I would like to add this to gnucash as some kind of asset so that as I spend it, the correctly scaled amount gets transferred to the expense account I use.  In other words, if I spend $100 from this account it's really only $86.
>
> I tried to do this by creating a security fund and then using the price editor to set the price to 0.86.  But when I insert a transaction from the new account to an expense account, it doesn't apply the 0.86 factor.   What is the right way to do what I want to do?
>
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Mike or Penny Novack-3
On 12/3/2017 10:16 AM, Ronal B Morse wrote:
> Adrian, is there a reason you treat the rebate as a negative expense
> instead of miscellaneous (non-taxable) income? To me, the rebate is
> something you get rather than something you don't give, but my
> analysis could be incorrect, and if it is I'd like to know.
>
> RBM
Yes, very good reason. So as not to overstate (both) income and
expenses. You did NOT have as an expense the full amount and then income
of the difference between the (actual) discounted expense and the full
price.

It might help if I gave a concrete example why this is not arbitrary?

To do that we will need to increase the amounts and put this into a
context where there is a specific regulation. I will use for the
regulation US IRS rules for 501(c)3s << charitable non-profits >>

Regulation: If gross income > $100,00 file the 990, if not, but >
$25,000 file the 990-EZ, if under that file just the electronic postcard
990-N << just indicates "we still exist", no details >>

Situation: Organization with all other income of $24,500 hires work done
for $3,000 but then the vendor says that will give a 20% discount to
non-profits. If this is treated as $600 of extra income, must file the
990-EZ instead of just the 990-N.



Michael D Novack
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

adrian
In reply to this post by Ronal B Morse-2
There may be technical accounting reasons to treat rebates as offsets to
expenses rather than income.  But my own reasons are simply that it's what
makes sense to me.  I don't really track income very carefully.  I mainly
track expenses.

A rebate is a complex form of discount where the vendor is trying to limit
your ability to use the discount (one time only) and they are hoping you
won't remember to send it in.  If I went to the store and saw a computer on
sale as original price $1000, marked down to $900 I would never dream of
entering that as a $1000 purchase and a $100 income.  A rebate is
conceptually identical to me: it is a delayed discount on my purchase, and
in my head if there is a $100 rebate I'm thinking "this thing costs $900,"
not "this costs $1000 but the expense will be offset by my higher income
when I get the rebate".   So for that reason, it seems like the obvious
thing is to treat the rebate as an offset to the original expense.  

In the case at hand I spent $430 on the gift card and when I buy something
that costs $100, I'm really only spending $86.  That's what makes sense to
me for how this ought to be counted.   Since I don't know the category of
the expense in advance, I can't just put in a $70 offset unless I put it as
"misc", in which case I lose track of some information about how I allocated
my money.  

So does anybody have advice on how to solve my original problem?  







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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Tommy Trussell
On Tue, Dec 5, 2017 at 9:14 AM, adrian <[hidden email]> wrote:

> There may be technical accounting reasons to treat rebates as offsets to
> expenses rather than income.  But my own reasons are simply that it's what
> makes sense to me.  I don't really track income very carefully.  I mainly
> track expenses.
>
> [cutting the definition of rebate]
>
> In the case at hand I spent $430 on the gift card and when I buy something
> that costs $100, I'm really only spending $86.  That's what makes sense to
> me for how this ought to be counted.   Since I don't know the category of
> the expense in advance, I can't just put in a $70 offset unless I put it as
> "misc", in which case I lose track of some information about how I
> allocated
> my money.
>
> So does anybody have advice on how to solve my original problem?
> <https://lists.gnucash.org/mailman/listinfo/gnucash-user>
>

I went back to your original question (remember that this is NOT a forum --
it's an email list that you're viewing through Nabble)

I bought a $500 gift card for $430 this week.  I would like to add this to
> gnucash as some kind of asset so that as I spend it, the correctly scaled
> amount gets transferred to the expense account I use.  In other words, if I
> spend $100 from this account it's really only $86.
>
> I tried to do this by creating a security fund and then using the price
> editor to set the price to 0.86.  But when I insert a transaction from the
> new account to an expense account, it doesn't apply the 0.86 factor.   What
> is the right way to do what I want to do?


I think you have demonstrated the difficulty with what you're trying to
do-- you're trying to make a rebate card a different KIND of currency,
which in one sense, it is. HOWEVER every time you make a purchase from that
card it will require a currency exchange, which adds a level of complexity
and may not produce the result you want.

I'm sure you could make it work, but in the end, it's a lot easier to just
offset the $70 against the expenses. TECHNICALLY you don't get benefit of
the full amount you spent on the card until you have completely depleted
the value of the card, but that would be a PITA (sorry for the acronym -- I
mean "difficult").

I think the real answer is to go back and think about what it is you want
to achieve.

I am inferring that you want to shop at the vendor's store and be able to
know the "discount" you have achieved by buying the special card. I presume
you might want to do that for price comparison purposes when shopping at
OTHER stores. Is that it?

I don't have the answer -- I'm just trying to help specify the issue.
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

adrian
Tommy Trussell wrote

>> Adrian:
>> In the case at hand I spent $430 on the gift card and when I buy
>> something
>> that costs $100, I'm really only spending $86.  That's what makes sense
>> to
>> me for how this ought to be counted.   Since I don't know the category of
>> the expense in advance, I can't just put in a $70 offset unless I put it
>> as
>> "misc", in which case I lose track of some information about how I
>> allocated
>> my money.
>>
>
> I went back to your original question (remember that this is NOT a forum
> --
> it's an email list that you're viewing through Nabble)

Yeah, despite that I have been unable to actually subscribe to the list.
But your point was you wanted more context, I suppose.  


>>I bought a $500 gift card for $430 this week.  I would like to add this to
>> gnucash as some kind of asset so that as I spend it, the correctly scaled
>> amount gets transferred to the expense account I use.  In other words, if
>> I
>> spend $100 from this account it's really only $86.
>>
>> I tried to do this by creating a security fund and then using the price
>> editor to set the price to 0.86.  But when I insert a transaction from
>> the
>> new account to an expense account, it doesn't apply the 0.86 factor.  
>> What
>> is the right way to do what I want to do?
>
>
> I think you have demonstrated the difficulty with what you're trying to
> do-- you're trying to make a rebate card a different KIND of currency,
> which in one sense, it is. HOWEVER every time you make a purchase from
> that
> card it will require a currency exchange, which adds a level of complexity
> and may not produce the result you want.
>
> I'm sure you could make it work, but in the end, it's a lot easier to just
> offset the $70 against the expenses. TECHNICALLY you don't get benefit of
> the full amount you spent on the card until you have completely depleted
> the value of the card, but that would be a PITA (sorry for the acronym --
> I
> mean "difficult").
>
> I think the real answer is to go back and think about what it is you want
> to achieve.

I'm not sure what exactly is unclear.  I am thinking of the acquisition of
this card not as a purchase, but as a shift of assets from one form to
another.  So instead of $430 in the bank I now have a different asset,
namely $500 on the card.   Yes, it's true, I don't benefit until I spend the
money.  But the same is true of money in the bank.  

But it's not really $500 on the card because I only spent $430 on it.  It is
exactly like a currency exchange, though it's not obvious to me why this
means my goal is a very complex one.   It seems pretty simple to have an
exchange rate and have the card denominated in some currency, say the Gifta,
that is equal to .86 dollars.  When I buy something using the card I can go
to the card's account and list the expenses in Giftas and they will be
automatically translated by the 0.86 factor.   (I assume that if I made an
account denominated in, say GBP, that I would be able to get that to
translate to the USD that I use for my regular accounts; after all, this is
something that is important to many people.)  

Now actually I realized that the solution I was fiddling with can be made to
work. As I mentioned before, I made an account and created a security and
tried to set its price using the price editor.  For some reason the Price
Editor doesn't seem to do anything, but there is a column labeled "Price" in
the account I made, and if I set this to 0.86 (which I have to do manually
for every transaction, it seems) then things work as I was hoping.  (And I
notice that prices I enter in the ledger appear in the price editor even
though the reverse doesn't seem to be the case.)   It would be even nicer if
I could set the price once and have that same price stay in effect until I
change it, rather than having to enter it again for each transaction with
the default price being "1".  

Why do I care?  It's just so that my accounting correctly tracks my
expenditures in different categories.   I don't need to use accounting
software to do price comparisons, but if I want to know how much I spent on
Widgets this year---and I buy some using the card---the number will be
inflated if I don't account for the discount.  





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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

nvsoar
On 12/06/17 12:44, adrian wrote:

> Tommy Trussell wrote
>>> Adrian:
>>> In the case at hand I spent $430 on the gift card and when I buy
>>> something
>>> that costs $100, I'm really only spending $86.  That's what makes sense
>>> to
>>> me for how this ought to be counted.   Since I don't know the category of
>>> the expense in advance, I can't just put in a $70 offset unless I put it
>>> as
>>> "misc", in which case I lose track of some information about how I
>>> allocated
>>> my money.
>>>
>> I went back to your original question (remember that this is NOT a forum
>> --
>> it's an email list that you're viewing through Nabble)
> Yeah, despite that I have been unable to actually subscribe to the list.
> But your point was you wanted more context, I suppose.
>
>
>>> I bought a $500 gift card for $430 this week.  I would like to add this to
>>> gnucash as some kind of asset so that as I spend it, the correctly scaled
>>> amount gets transferred to the expense account I use.  In other words, if
>>> I
>>> spend $100 from this account it's really only $86.
>>>
>>> I tried to do this by creating a security fund and then using the price
>>> editor to set the price to 0.86.  But when I insert a transaction from
>>> the
>>> new account to an expense account, it doesn't apply the 0.86 factor.
>>> What
>>> is the right way to do what I want to do?
>>
>> I think you have demonstrated the difficulty with what you're trying to
>> do-- you're trying to make a rebate card a different KIND of currency,
>> which in one sense, it is. HOWEVER every time you make a purchase from
>> that
>> card it will require a currency exchange, which adds a level of complexity
>> and may not produce the result you want.
>>
>> I'm sure you could make it work, but in the end, it's a lot easier to just
>> offset the $70 against the expenses. TECHNICALLY you don't get benefit of
>> the full amount you spent on the card until you have completely depleted
>> the value of the card, but that would be a PITA (sorry for the acronym --
>> I
>> mean "difficult").
>>
>> I think the real answer is to go back and think about what it is you want
>> to achieve.
> I'm not sure what exactly is unclear.  I am thinking of the acquisition of
> this card not as a purchase, but as a shift of assets from one form to
> another.  So instead of $430 in the bank I now have a different asset,
> namely $500 on the card.   Yes, it's true, I don't benefit until I spend the
> money.  But the same is true of money in the bank.
>
> But it's not really $500 on the card because I only spent $430 on it.  It is
> exactly like a currency exchange, though it's not obvious to me why this
> means my goal is a very complex one.   It seems pretty simple to have an
> exchange rate and have the card denominated in some currency, say the Gifta,
> that is equal to .86 dollars.  When I buy something using the card I can go
> to the card's account and list the expenses in Giftas and they will be
> automatically translated by the 0.86 factor.   (I assume that if I made an
> account denominated in, say GBP, that I would be able to get that to
> translate to the USD that I use for my regular accounts; after all, this is
> something that is important to many people.)
>
> Now actually I realized that the solution I was fiddling with can be made to
> work. As I mentioned before, I made an account and created a security and
> tried to set its price using the price editor.  For some reason the Price
> Editor doesn't seem to do anything, but there is a column labeled "Price" in
> the account I made, and if I set this to 0.86 (which I have to do manually
> for every transaction, it seems) then things work as I was hoping.  (And I
> notice that prices I enter in the ledger appear in the price editor even
> though the reverse doesn't seem to be the case.)   It would be even nicer if
> I could set the price once and have that same price stay in effect until I
> change it, rather than having to enter it again for each transaction with
> the default price being "1".
>
> Why do I care?  It's just so that my accounting correctly tracks my
> expenditures in different categories.   I don't need to use accounting
> software to do price comparisons, but if I want to know how much I spent on
> Widgets this year---and I buy some using the card---the number will be
> inflated if I don't account for the discount.
>
>
>
>
>
> --
> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
Hmmmm.  Seems to me that you received a $70.00 gift along with the card.
nvsoar
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Adrien Monteleone
I have to concur on the $70 gift idea.

You paid $430 for a stored value card that has $500 on it.

This is no different than if you handed a bank teller $430 in small bills and they returned to you 5 one hundred dollar bills. (assuming the bank is just fine with that)

When you spend $100 from this card you aren’t really spending $86. You’re spending $100.

After you’ve spent $430, the next $70 on the card is a gift to you from whomever sold you the card.

But you can’t truly determine which $70 is gift and which isn’t.

The easiest and likely most correct transaction is this:

Dr. Assets:Cash $430
Dr. Income:Gift Received $70
Cr. Assets:Prepaid Card $500

When you use the card, all transactions are just normal as if you’d paid $500 for it.

There is no discount. There is no rebate. You received a ‘gift’ of $70 in the form of extra stored value on the card.

Had you paid nothing and received a card with a $70 value, the transaction would be:

Dr. Income:Gift Received $70
Cr. Assets:Prepaid Card $70

Note, the difference is NOT the $70. The difference is what you paid for the extra value, in this case $430.

Had you paid $430 for one card and the merchant gave you a separate card with $70 value on it (that’s two cards totaling $500) then your entries would be this:

Dr. Assets:Cash $430
Cr. Assets:Prepaid Card $430

Dr. Income:Gift Received $70
Cr. Assets:Prepaid Card $70

There’s no fundamental difference in these two separate transactions than the combined transaction above. They record the same net amounts in the same places. The fact that all of this takes place on one card instead of two, or that the gift is from a merchant instead of a family member or friend does not change the nature of the transaction.

You can record anything you want the way you want if this is just for you to keep track of, but the goal should always be to use transactions to show an accurate picture of what happened. What happened is NOT that you saved money on future purchases. What happened is you received a gift of $70 in the form of a stored value card.

But by all means, ask a CPA if it’s that important to you.

Regards,
Adrien

> On Dec 7, 2017, at 3:46 PM, nvsoar <[hidden email]> wrote:
>
> On 12/06/17 12:44, adrian wrote:
>> Tommy Trussell wrote
>>>> Adrian:
>>>> In the case at hand I spent $430 on the gift card and when I buy
>>>> something
>>>> that costs $100, I'm really only spending $86.  That's what makes sense
>>>> to
>>>> me for how this ought to be counted.   Since I don't know the category of
>>>> the expense in advance, I can't just put in a $70 offset unless I put it
>>>> as
>>>> "misc", in which case I lose track of some information about how I
>>>> allocated
>>>> my money.
>>>>
>>> I went back to your original question (remember that this is NOT a forum
>>> --
>>> it's an email list that you're viewing through Nabble)
>> Yeah, despite that I have been unable to actually subscribe to the list.
>> But your point was you wanted more context, I suppose.
>>
>>
>>>> I bought a $500 gift card for $430 this week.  I would like to add this to
>>>> gnucash as some kind of asset so that as I spend it, the correctly scaled
>>>> amount gets transferred to the expense account I use.  In other words, if
>>>> I
>>>> spend $100 from this account it's really only $86.
>>>>
>>>> I tried to do this by creating a security fund and then using the price
>>>> editor to set the price to 0.86.  But when I insert a transaction from
>>>> the
>>>> new account to an expense account, it doesn't apply the 0.86 factor.
>>>> What
>>>> is the right way to do what I want to do?
>>>
>>> I think you have demonstrated the difficulty with what you're trying to
>>> do-- you're trying to make a rebate card a different KIND of currency,
>>> which in one sense, it is. HOWEVER every time you make a purchase from
>>> that
>>> card it will require a currency exchange, which adds a level of complexity
>>> and may not produce the result you want.
>>>
>>> I'm sure you could make it work, but in the end, it's a lot easier to just
>>> offset the $70 against the expenses. TECHNICALLY you don't get benefit of
>>> the full amount you spent on the card until you have completely depleted
>>> the value of the card, but that would be a PITA (sorry for the acronym --
>>> I
>>> mean "difficult").
>>>
>>> I think the real answer is to go back and think about what it is you want
>>> to achieve.
>> I'm not sure what exactly is unclear.  I am thinking of the acquisition of
>> this card not as a purchase, but as a shift of assets from one form to
>> another.  So instead of $430 in the bank I now have a different asset,
>> namely $500 on the card.   Yes, it's true, I don't benefit until I spend the
>> money.  But the same is true of money in the bank.
>>
>> But it's not really $500 on the card because I only spent $430 on it.  It is
>> exactly like a currency exchange, though it's not obvious to me why this
>> means my goal is a very complex one.   It seems pretty simple to have an
>> exchange rate and have the card denominated in some currency, say the Gifta,
>> that is equal to .86 dollars.  When I buy something using the card I can go
>> to the card's account and list the expenses in Giftas and they will be
>> automatically translated by the 0.86 factor.   (I assume that if I made an
>> account denominated in, say GBP, that I would be able to get that to
>> translate to the USD that I use for my regular accounts; after all, this is
>> something that is important to many people.)
>>
>> Now actually I realized that the solution I was fiddling with can be made to
>> work. As I mentioned before, I made an account and created a security and
>> tried to set its price using the price editor.  For some reason the Price
>> Editor doesn't seem to do anything, but there is a column labeled "Price" in
>> the account I made, and if I set this to 0.86 (which I have to do manually
>> for every transaction, it seems) then things work as I was hoping.  (And I
>> notice that prices I enter in the ledger appear in the price editor even
>> though the reverse doesn't seem to be the case.)   It would be even nicer if
>> I could set the price once and have that same price stay in effect until I
>> change it, rather than having to enter it again for each transaction with
>> the default price being "1".
>>
>> Why do I care?  It's just so that my accounting correctly tracks my
>> expenditures in different categories.   I don't need to use accounting
>> software to do price comparisons, but if I want to know how much I spent on
>> Widgets this year---and I buy some using the card---the number will be
>> inflated if I don't account for the discount.
>>
>>
>>
>>
>>
>> --
>> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
> Hmmmm.  Seems to me that you received a $70.00 gift along with the card.
> nvsoar
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

David Carlson-4
Adrian,

While I am not an accountant, historically I have used a method similar to
that suggested by Adrien.  However, I am intrigued by the answer provided
by Michael Novack, as it avoids the problem of overstating potentially
taxable income without needing to have a group of accounts to segregate
before running your tax reports at the end of the year.

Thus I am considering switching to a method modeled on his suggestion.

David C

On Thu, Dec 7, 2017 at 4:19 PM, Adrien Monteleone <
[hidden email]> wrote:

> I have to concur on the $70 gift idea.
>
> You paid $430 for a stored value card that has $500 on it.
>
> This is no different than if you handed a bank teller $430 in small bills
> and they returned to you 5 one hundred dollar bills. (assuming the bank is
> just fine with that)
>
> When you spend $100 from this card you aren’t really spending $86. You’re
> spending $100.
>
> After you’ve spent $430, the next $70 on the card is a gift to you from
> whomever sold you the card.
>
> But you can’t truly determine which $70 is gift and which isn’t.
>
> The easiest and likely most correct transaction is this:
>
> Dr. Assets:Cash $430
> Dr. Income:Gift Received $70
> Cr. Assets:Prepaid Card $500
>
> When you use the card, all transactions are just normal as if you’d paid
> $500 for it.
>
> There is no discount. There is no rebate. You received a ‘gift’ of $70 in
> the form of extra stored value on the card.
>
> Had you paid nothing and received a card with a $70 value, the transaction
> would be:
>
> Dr. Income:Gift Received $70
> Cr. Assets:Prepaid Card $70
>
> Note, the difference is NOT the $70. The difference is what you paid for
> the extra value, in this case $430.
>
> Had you paid $430 for one card and the merchant gave you a separate card
> with $70 value on it (that’s two cards totaling $500) then your entries
> would be this:
>
> Dr. Assets:Cash $430
> Cr. Assets:Prepaid Card $430
>
> Dr. Income:Gift Received $70
> Cr. Assets:Prepaid Card $70
>
> There’s no fundamental difference in these two separate transactions than
> the combined transaction above. They record the same net amounts in the
> same places. The fact that all of this takes place on one card instead of
> two, or that the gift is from a merchant instead of a family member or
> friend does not change the nature of the transaction.
>
> You can record anything you want the way you want if this is just for you
> to keep track of, but the goal should always be to use transactions to show
> an accurate picture of what happened. What happened is NOT that you saved
> money on future purchases. What happened is you received a gift of $70 in
> the form of a stored value card.
>
> But by all means, ask a CPA if it’s that important to you.
>
> Regards,
> Adrien
>
> > On Dec 7, 2017, at 3:46 PM, nvsoar <[hidden email]> wrote:
> >
> > On 12/06/17 12:44, adrian wrote:
> >> Tommy Trussell wrote
> >>>> Adrian:
> >>>> In the case at hand I spent $430 on the gift card and when I buy
> >>>> something
> >>>> that costs $100, I'm really only spending $86.  That's what makes
> sense
> >>>> to
> >>>> me for how this ought to be counted.   Since I don't know the
> category of
> >>>> the expense in advance, I can't just put in a $70 offset unless I put
> it
> >>>> as
> >>>> "misc", in which case I lose track of some information about how I
> >>>> allocated
> >>>> my money.
> >>>>
> >>> I went back to your original question (remember that this is NOT a
> forum
> >>> --
> >>> it's an email list that you're viewing through Nabble)
> >> Yeah, despite that I have been unable to actually subscribe to the list.
> >> But your point was you wanted more context, I suppose.
> >>
> >>
> >>>> I bought a $500 gift card for $430 this week.  I would like to add
> this to
> >>>> gnucash as some kind of asset so that as I spend it, the correctly
> scaled
> >>>> amount gets transferred to the expense account I use.  In other
> words, if
> >>>> I
> >>>> spend $100 from this account it's really only $86.
> >>>>
> >>>> I tried to do this by creating a security fund and then using the
> price
> >>>> editor to set the price to 0.86.  But when I insert a transaction from
> >>>> the
> >>>> new account to an expense account, it doesn't apply the 0.86 factor.
> >>>> What
> >>>> is the right way to do what I want to do?
> >>>
> >>> I think you have demonstrated the difficulty with what you're trying to
> >>> do-- you're trying to make a rebate card a different KIND of currency,
> >>> which in one sense, it is. HOWEVER every time you make a purchase from
> >>> that
> >>> card it will require a currency exchange, which adds a level of
> complexity
> >>> and may not produce the result you want.
> >>>
> >>> I'm sure you could make it work, but in the end, it's a lot easier to
> just
> >>> offset the $70 against the expenses. TECHNICALLY you don't get benefit
> of
> >>> the full amount you spent on the card until you have completely
> depleted
> >>> the value of the card, but that would be a PITA (sorry for the acronym
> --
> >>> I
> >>> mean "difficult").
> >>>
> >>> I think the real answer is to go back and think about what it is you
> want
> >>> to achieve.
> >> I'm not sure what exactly is unclear.  I am thinking of the acquisition
> of
> >> this card not as a purchase, but as a shift of assets from one form to
> >> another.  So instead of $430 in the bank I now have a different asset,
> >> namely $500 on the card.   Yes, it's true, I don't benefit until I
> spend the
> >> money.  But the same is true of money in the bank.
> >>
> >> But it's not really $500 on the card because I only spent $430 on it.
> It is
> >> exactly like a currency exchange, though it's not obvious to me why this
> >> means my goal is a very complex one.   It seems pretty simple to have an
> >> exchange rate and have the card denominated in some currency, say the
> Gifta,
> >> that is equal to .86 dollars.  When I buy something using the card I
> can go
> >> to the card's account and list the expenses in Giftas and they will be
> >> automatically translated by the 0.86 factor.   (I assume that if I made
> an
> >> account denominated in, say GBP, that I would be able to get that to
> >> translate to the USD that I use for my regular accounts; after all,
> this is
> >> something that is important to many people.)
> >>
> >> Now actually I realized that the solution I was fiddling with can be
> made to
> >> work. As I mentioned before, I made an account and created a security
> and
> >> tried to set its price using the price editor.  For some reason the
> Price
> >> Editor doesn't seem to do anything, but there is a column labeled
> "Price" in
> >> the account I made, and if I set this to 0.86 (which I have to do
> manually
> >> for every transaction, it seems) then things work as I was hoping.
> (And I
> >> notice that prices I enter in the ledger appear in the price editor even
> >> though the reverse doesn't seem to be the case.)   It would be even
> nicer if
> >> I could set the price once and have that same price stay in effect
> until I
> >> change it, rather than having to enter it again for each transaction
> with
> >> the default price being "1".
> >>
> >> Why do I care?  It's just so that my accounting correctly tracks my
> >> expenditures in different categories.   I don't need to use accounting
> >> software to do price comparisons, but if I want to know how much I
> spent on
> >> Widgets this year---and I buy some using the card---the number will be
> >> inflated if I don't account for the discount.
> >>
> >>
> >>
> >>
> >>
> >> --
> >> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-
> f1415819.html
> > Hmmmm.  Seems to me that you received a $70.00 gift along with the card.
> > nvsoar
> > _______________________________________________
> > gnucash-user mailing list
> > [hidden email]
> > https://lists.gnucash.org/mailman/listinfo/gnucash-user
> > -----
> > Please remember to CC this list on all your replies.
> > You can do this by using Reply-To-List or Reply-All.
>
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Mike or Penny Novack-3
On 12/7/2017 5:53 PM, David Carlson wrote:

> Adrian,
>
> While I am not an accountant, historically I have used a method similar to
> that suggested by Adrien.  However, I am intrigued by the answer provided
> by Michael Novack, as it avoids the problem of overstating potentially
> taxable income without needing to have a group of accounts to segregate
> before running your tax reports at the end of the year.
>
> Thus I am considering switching to a method modeled on his suggestion.
>
> David C
>
There are other situations which might call for the adjustment of an
asset value (or liability amount) that should not be considered either
income or expense. I suggest looking in accounting texts with the topic
probably under "journal entries". Some examples:

a) Back in the 60's I went to school with the help of NDF loans. There
might be something similar today. They had a condition on the liability
amount. Could treat these are ordinary loans BUT every year you taught
forgave 10% of the loan.

b) When you opened your books, one of the major asset categories was art
work. Yes, if you sold a picture for a greater amount than its book
value, a capital gain (or for less, a capital loss). But suppose instead
a picture thought to be by artist A was later discovered to have been by
artist B (with VERY different values).

I am NOT an accountant. But I think these would be handled by "journal
entry" adjustments with equity being the other side of the transaction.

Michael
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Adrien Monteleone
Michael,

I don’t regularly deal with loan entries, and each jurisdiction is different, but in the U.S., loan forgiveness (the technical term I believe is 'discharge of indebtedness') is often considered a source of income and is generally taxable. That 10% annual forgiveness would likely have to be booked against income.(note the qualifications of ‘often’, ‘generally’, ‘likely’ — your mileage may vary)

As for an art purchase with potential capital gain or loss, there’s no entry required if you find out the artist was different. You book what you actually paid at the buy and you book what you actually received on the sale. The difference is either a gain or loss. ‘Expected' gain or loss is mostly for your own curiosity and probably should not be reflected in financial books. The value of an asset in financial books is never what it ‘might’ or ‘should’ be worth. The asset is only *actually* worth what was paid for it.

An adjusted asset value is going to happen for a particular reason. Either it is a correction of an erroneous initial value where a simple correcting entry solves the problem, or it is a specified write-down such as depreciation which is balanced by an expense. (essentially a ‘use’ transaction of a pre-paid expense) You don’t generally realize an increase in an asset value short of a correcting entry until and unless the asset is sold. (This is why special trading accounts are used to track present value of securities separately without actually adjusting the underlying asset value.)

Anything else would be a shift from one asset to another.

As for liability changes, again, these are either correcting entries to fix errors, shifts to other liabilities (a credit card balance transfer for example) or income. (debt you no longer owe and don’t have to pay)

The question of if those events are taxable or not depends on your local taxing jurisdiction and specific circumstances should be answered with the guidance of a CPA.

And I’m no CPA either, just passing along what I’ve learned in school and having to find these answers for myself over the years.

Regards,
Adrien

> On Dec 8, 2017, at 9:23 AM, Mike or Penny Novack <[hidden email]> wrote:
>
> On 12/7/2017 5:53 PM, David Carlson wrote:
>> Adrian,
>>
>> While I am not an accountant, historically I have used a method similar to
>> that suggested by Adrien.  However, I am intrigued by the answer provided
>> by Michael Novack, as it avoids the problem of overstating potentially
>> taxable income without needing to have a group of accounts to segregate
>> before running your tax reports at the end of the year.
>>
>> Thus I am considering switching to a method modeled on his suggestion.
>>
>> David C
>>
> There are other situations which might call for the adjustment of an asset value (or liability amount) that should not be considered either income or expense. I suggest looking in accounting texts with the topic probably under "journal entries". Some examples:
>
> a) Back in the 60's I went to school with the help of NDF loans. There might be something similar today. They had a condition on the liability amount. Could treat these are ordinary loans BUT every year you taught forgave 10% of the loan.
>
> b) When you opened your books, one of the major asset categories was art work. Yes, if you sold a picture for a greater amount than its book value, a capital gain (or for less, a capital loss). But suppose instead a picture thought to be by artist A was later discovered to have been by artist B (with VERY different values).
>
> I am NOT an accountant. But I think these would be handled by "journal entry" adjustments with equity being the other side of the transaction.
>
> Michael
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

adrian
In reply to this post by Adrien Monteleone
I'm tracking expenses so I know where my money goes, not in order to comply
with regulations.   It seems like if I were tracking these expenses because
I was going to deduct them from something from business income for tax
purposes then the best approach would be to isolate the business
expenses---purchase the gift card with a business asset and then use the
gift card only for business expenses and there's no ambiguity.  If, in fact,
you buy a discounted asset and then use it to buy some deductible things and
some non-deductible things I don't have a clue what accounting law requires.
Would you be allowed to spend $250 on deductible items, $250 on
non-deductible items, and then the $70 becomes taxable income?  Nontaxable
income?  To me the only strategy that seems reasonable for making sense of
this is the very one I'm proposing, which would be equivalent to dividing
the $70 proportionally into taxable and nontaxable income.   As you say, the
"gift" method is potentially problematic because you can't tell which $70 is
"gift" and which isn't, so it seems like that makes accurate accounting
impossible.

To me it does not make any sense to identify discounts from merchants as
"gifts".  That's just not an accurate description of the situation.  The
merchant did not give me a "gift".  The merchant gave me a discount.  I
suppose I have to agree that if I walked into a store where I never shop and
the storekeeper handed me $70 there would be no other reasonable way to
account for this.  But this is not a situation that occurs.   The merchant
offered me the $70 only after I already paid $430.   My thinking when I
bought the gift card was specifically that I will acquire merchandise from
this merchant (in the future) at a discount---not that I am getting a gift
from the merchant.  Just like I do not consider it a gift if I order an item
at "50% off".  This situation seems to me the same.  

Declaring the $70 to be a rebate from the merchant seems like a reasonable
method.  I just didn't like that so well because it captures this $70 in a
meaningless "rebate" category that doesn't really tell me what actually
happened.   And as I said before, I wouldn't buy a Widget marked "50% off"
for $100 and enter this as a $200 expense with a $100 (nontaxable) gift
income.  




Adrien Monteleone wrote

> I have to concur on the $70 gift idea.
>
> You paid $430 for a stored value card that has $500 on it.
>
> This is no different than if you handed a bank teller $430 in small bills
> and they returned to you 5 one hundred dollar bills. (assuming the bank is
> just fine with that)
>
> When you spend $100 from this card you aren’t really spending $86. You’re
> spending $100.
>
> After you’ve spent $430, the next $70 on the card is a gift to you from
> whomever sold you the card.
>
> But you can’t truly determine which $70 is gift and which isn’t.
>
> The easiest and likely most correct transaction is this:
>
> Dr. Assets:Cash $430
> Dr. Income:Gift Received $70
> Cr. Assets:Prepaid Card $500
>
> When you use the card, all transactions are just normal as if you’d paid
> $500 for it.
>
> There is no discount. There is no rebate. You received a ‘gift’ of $70 in
> the form of extra stored value on the card.
>
> Had you paid nothing and received a card with a $70 value, the transaction
> would be:
>
> Dr. Income:Gift Received $70
> Cr. Assets:Prepaid Card $70
>
> Note, the difference is NOT the $70. The difference is what you paid for
> the extra value, in this case $430.
>
> Had you paid $430 for one card and the merchant gave you a separate card
> with $70 value on it (that’s two cards totaling $500) then your entries
> would be this:
>
> Dr. Assets:Cash $430
> Cr. Assets:Prepaid Card $430
>
> Dr. Income:Gift Received $70
> Cr. Assets:Prepaid Card $70
>
> There’s no fundamental difference in these two separate transactions than
> the combined transaction above. They record the same net amounts in the
> same places. The fact that all of this takes place on one card instead of
> two, or that the gift is from a merchant instead of a family member or
> friend does not change the nature of the transaction.
>
> You can record anything you want the way you want if this is just for you
> to keep track of, but the goal should always be to use transactions to
> show an accurate picture of what happened. What happened is NOT that you
> saved money on future purchases. What happened is you received a gift of
> $70 in the form of a stored value card.
>
> But by all means, ask a CPA if it’s that important to you.
>
> Regards,
> Adrien
>
>> On Dec 7, 2017, at 3:46 PM, nvsoar &lt;

> nvsoar@

> &gt; wrote:
>>
>> On 12/06/17 12:44, adrian wrote:
>>> Tommy Trussell wrote
>>>>> Adrian:
>>>>> In the case at hand I spent $430 on the gift card and when I buy
>>>>> something
>>>>> that costs $100, I'm really only spending $86.  That's what makes
>>>>> sense
>>>>> to
>>>>> me for how this ought to be counted.   Since I don't know the category
>>>>> of
>>>>> the expense in advance, I can't just put in a $70 offset unless I put
>>>>> it
>>>>> as
>>>>> "misc", in which case I lose track of some information about how I
>>>>> allocated
>>>>> my money.
>>>>>
>>>> I went back to your original question (remember that this is NOT a
>>>> forum
>>>> --
>>>> it's an email list that you're viewing through Nabble)
>>> Yeah, despite that I have been unable to actually subscribe to the list.
>>> But your point was you wanted more context, I suppose.
>>>
>>>
>>>>> I bought a $500 gift card for $430 this week.  I would like to add
>>>>> this to
>>>>> gnucash as some kind of asset so that as I spend it, the correctly
>>>>> scaled
>>>>> amount gets transferred to the expense account I use.  In other words,
>>>>> if
>>>>> I
>>>>> spend $100 from this account it's really only $86.
>>>>>
>>>>> I tried to do this by creating a security fund and then using the
>>>>> price
>>>>> editor to set the price to 0.86.  But when I insert a transaction from
>>>>> the
>>>>> new account to an expense account, it doesn't apply the 0.86 factor.
>>>>> What
>>>>> is the right way to do what I want to do?
>>>>
>>>> I think you have demonstrated the difficulty with what you're trying to
>>>> do-- you're trying to make a rebate card a different KIND of currency,
>>>> which in one sense, it is. HOWEVER every time you make a purchase from
>>>> that
>>>> card it will require a currency exchange, which adds a level of
>>>> complexity
>>>> and may not produce the result you want.
>>>>
>>>> I'm sure you could make it work, but in the end, it's a lot easier to
>>>> just
>>>> offset the $70 against the expenses. TECHNICALLY you don't get benefit
>>>> of
>>>> the full amount you spent on the card until you have completely
>>>> depleted
>>>> the value of the card, but that would be a PITA (sorry for the acronym
>>>> --
>>>> I
>>>> mean "difficult").
>>>>
>>>> I think the real answer is to go back and think about what it is you
>>>> want
>>>> to achieve.
>>> I'm not sure what exactly is unclear.  I am thinking of the acquisition
>>> of
>>> this card not as a purchase, but as a shift of assets from one form to
>>> another.  So instead of $430 in the bank I now have a different asset,
>>> namely $500 on the card.   Yes, it's true, I don't benefit until I spend
>>> the
>>> money.  But the same is true of money in the bank.
>>>
>>> But it's not really $500 on the card because I only spent $430 on it.
>>> It is
>>> exactly like a currency exchange, though it's not obvious to me why this
>>> means my goal is a very complex one.   It seems pretty simple to have an
>>> exchange rate and have the card denominated in some currency, say the
>>> Gifta,
>>> that is equal to .86 dollars.  When I buy something using the card I can
>>> go
>>> to the card's account and list the expenses in Giftas and they will be
>>> automatically translated by the 0.86 factor.   (I assume that if I made
>>> an
>>> account denominated in, say GBP, that I would be able to get that to
>>> translate to the USD that I use for my regular accounts; after all, this
>>> is
>>> something that is important to many people.)
>>>
>>> Now actually I realized that the solution I was fiddling with can be
>>> made to
>>> work. As I mentioned before, I made an account and created a security
>>> and
>>> tried to set its price using the price editor.  For some reason the
>>> Price
>>> Editor doesn't seem to do anything, but there is a column labeled
>>> "Price" in
>>> the account I made, and if I set this to 0.86 (which I have to do
>>> manually
>>> for every transaction, it seems) then things work as I was hoping.  (And
>>> I
>>> notice that prices I enter in the ledger appear in the price editor even
>>> though the reverse doesn't seem to be the case.)   It would be even
>>> nicer if
>>> I could set the price once and have that same price stay in effect until
>>> I
>>> change it, rather than having to enter it again for each transaction
>>> with
>>> the default price being "1".
>>>
>>> Why do I care?  It's just so that my accounting correctly tracks my
>>> expenditures in different categories.   I don't need to use accounting
>>> software to do price comparisons, but if I want to know how much I spent
>>> on
>>> Widgets this year---and I buy some using the card---the number will be
>>> inflated if I don't account for the discount.
>>>
>>>
>>>
>>>
>>>
>>> --
>>> Sent from:
>>> http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
>> Hmmmm.  Seems to me that you received a $70.00 gift along with the card.
>> nvsoar
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Re: How to create an asset with a reduced value compared to my regular currency (dollars)

Adrien Monteleone
Adrian,

There’s no discount. Now or in the future. You’re going to buy items from that merchant in the future at their then current price, not less than that price.

There’s no rebate. You aren’t paying full price and getting money back.

You handed the merchant $430.

They handed you back $500.

The ‘card’ is not merchandise. It’s stored value of spendable currency.

The $70 doesn’t enter the picture as you spend the currency on the card, it entered the picture at the point you acquired the card. That is when it should be recorded.

You could turn around and ‘sell’ this card to someone else for $500 cash. That’s an even exchange of value. That means the card asset is valued at $500 because that is what is stored on it, not $430+$70 in ‘rebates’ or ‘discounts’. That means right now, you need to balance your $430 cash asset decrease with something, and that something is most likely a gift received.

You are having trouble finding how to best enter the transactions of future purchases because you’re trying to treat the extra $70 as a rebate or discount when it is not.

The question of taxability depends on jurisdiction. I could be wrong, but in the U.S. I think gifts up to a certain amount (in the 10’s of $1k’s) are non-taxable or exempt so $70 should not be an issue. But please check with a CPA.

The only other question you might want to consider is:

Is this a fungible card like a pre-paid VISA? or is it a gift card only usable at the merchant?

I don’t think the answer changes how to record the transaction(s) but it might shed light on why you view the card as containing a future discount instead of being extra stored value for which you did not pay. If it is a merchant only gift card, I see why you have this view, but if it is a pre-paid card usable anywhere there shouldn’t be any confusion.

I don’t think I could offer anything more on the subject.

Regards,
Adrien

> On Dec 12, 2017, at 9:01 AM, adrian <[hidden email]> wrote:
>
> I'm tracking expenses so I know where my money goes, not in order to comply
> with regulations.   It seems like if I were tracking these expenses because
> I was going to deduct them from something from business income for tax
> purposes then the best approach would be to isolate the business
> expenses---purchase the gift card with a business asset and then use the
> gift card only for business expenses and there's no ambiguity.  If, in fact,
> you buy a discounted asset and then use it to buy some deductible things and
> some non-deductible things I don't have a clue what accounting law requires.
> Would you be allowed to spend $250 on deductible items, $250 on
> non-deductible items, and then the $70 becomes taxable income?  Nontaxable
> income?  To me the only strategy that seems reasonable for making sense of
> this is the very one I'm proposing, which would be equivalent to dividing
> the $70 proportionally into taxable and nontaxable income.   As you say, the
> "gift" method is potentially problematic because you can't tell which $70 is
> "gift" and which isn't, so it seems like that makes accurate accounting
> impossible.
>
> To me it does not make any sense to identify discounts from merchants as
> "gifts".  That's just not an accurate description of the situation.  The
> merchant did not give me a "gift".  The merchant gave me a discount.  I
> suppose I have to agree that if I walked into a store where I never shop and
> the storekeeper handed me $70 there would be no other reasonable way to
> account for this.  But this is not a situation that occurs.   The merchant
> offered me the $70 only after I already paid $430.   My thinking when I
> bought the gift card was specifically that I will acquire merchandise from
> this merchant (in the future) at a discount---not that I am getting a gift
> from the merchant.  Just like I do not consider it a gift if I order an item
> at "50% off".  This situation seems to me the same.  
>
> Declaring the $70 to be a rebate from the merchant seems like a reasonable
> method.  I just didn't like that so well because it captures this $70 in a
> meaningless "rebate" category that doesn't really tell me what actually
> happened.   And as I said before, I wouldn't buy a Widget marked "50% off"
> for $100 and enter this as a $200 expense with a $100 (nontaxable) gift
> income.  
>
>
>
>
> Adrien Monteleone wrote
>> I have to concur on the $70 gift idea.
>>
>> You paid $430 for a stored value card that has $500 on it.
>>
>> This is no different than if you handed a bank teller $430 in small bills
>> and they returned to you 5 one hundred dollar bills. (assuming the bank is
>> just fine with that)
>>
>> When you spend $100 from this card you aren’t really spending $86. You’re
>> spending $100.
>>
>> After you’ve spent $430, the next $70 on the card is a gift to you from
>> whomever sold you the card.
>>
>> But you can’t truly determine which $70 is gift and which isn’t.
>>
>> The easiest and likely most correct transaction is this:
>>
>> Dr. Assets:Cash $430
>> Dr. Income:Gift Received $70
>> Cr. Assets:Prepaid Card $500
>>
>> When you use the card, all transactions are just normal as if you’d paid
>> $500 for it.
>>
>> There is no discount. There is no rebate. You received a ‘gift’ of $70 in
>> the form of extra stored value on the card.
>>
>> Had you paid nothing and received a card with a $70 value, the transaction
>> would be:
>>
>> Dr. Income:Gift Received $70
>> Cr. Assets:Prepaid Card $70
>>
>> Note, the difference is NOT the $70. The difference is what you paid for
>> the extra value, in this case $430.
>>
>> Had you paid $430 for one card and the merchant gave you a separate card
>> with $70 value on it (that’s two cards totaling $500) then your entries
>> would be this:
>>
>> Dr. Assets:Cash $430
>> Cr. Assets:Prepaid Card $430
>>
>> Dr. Income:Gift Received $70
>> Cr. Assets:Prepaid Card $70
>>
>> There’s no fundamental difference in these two separate transactions than
>> the combined transaction above. They record the same net amounts in the
>> same places. The fact that all of this takes place on one card instead of
>> two, or that the gift is from a merchant instead of a family member or
>> friend does not change the nature of the transaction.
>>
>> You can record anything you want the way you want if this is just for you
>> to keep track of, but the goal should always be to use transactions to
>> show an accurate picture of what happened. What happened is NOT that you
>> saved money on future purchases. What happened is you received a gift of
>> $70 in the form of a stored value card.
>>
>> But by all means, ask a CPA if it’s that important to you.
>>
>> Regards,
>> Adrien
>>
>>> On Dec 7, 2017, at 3:46 PM, nvsoar &lt;
>
>> nvsoar@
>
>> &gt; wrote:
>>>
>>> On 12/06/17 12:44, adrian wrote:
>>>> Tommy Trussell wrote
>>>>>> Adrian:
>>>>>> In the case at hand I spent $430 on the gift card and when I buy
>>>>>> something
>>>>>> that costs $100, I'm really only spending $86.  That's what makes
>>>>>> sense
>>>>>> to
>>>>>> me for how this ought to be counted.   Since I don't know the category
>>>>>> of
>>>>>> the expense in advance, I can't just put in a $70 offset unless I put
>>>>>> it
>>>>>> as
>>>>>> "misc", in which case I lose track of some information about how I
>>>>>> allocated
>>>>>> my money.
>>>>>>
>>>>> I went back to your original question (remember that this is NOT a
>>>>> forum
>>>>> --
>>>>> it's an email list that you're viewing through Nabble)
>>>> Yeah, despite that I have been unable to actually subscribe to the list.
>>>> But your point was you wanted more context, I suppose.
>>>>
>>>>
>>>>>> I bought a $500 gift card for $430 this week.  I would like to add
>>>>>> this to
>>>>>> gnucash as some kind of asset so that as I spend it, the correctly
>>>>>> scaled
>>>>>> amount gets transferred to the expense account I use.  In other words,
>>>>>> if
>>>>>> I
>>>>>> spend $100 from this account it's really only $86.
>>>>>>
>>>>>> I tried to do this by creating a security fund and then using the
>>>>>> price
>>>>>> editor to set the price to 0.86.  But when I insert a transaction from
>>>>>> the
>>>>>> new account to an expense account, it doesn't apply the 0.86 factor.
>>>>>> What
>>>>>> is the right way to do what I want to do?
>>>>>
>>>>> I think you have demonstrated the difficulty with what you're trying to
>>>>> do-- you're trying to make a rebate card a different KIND of currency,
>>>>> which in one sense, it is. HOWEVER every time you make a purchase from
>>>>> that
>>>>> card it will require a currency exchange, which adds a level of
>>>>> complexity
>>>>> and may not produce the result you want.
>>>>>
>>>>> I'm sure you could make it work, but in the end, it's a lot easier to
>>>>> just
>>>>> offset the $70 against the expenses. TECHNICALLY you don't get benefit
>>>>> of
>>>>> the full amount you spent on the card until you have completely
>>>>> depleted
>>>>> the value of the card, but that would be a PITA (sorry for the acronym
>>>>> --
>>>>> I
>>>>> mean "difficult").
>>>>>
>>>>> I think the real answer is to go back and think about what it is you
>>>>> want
>>>>> to achieve.
>>>> I'm not sure what exactly is unclear.  I am thinking of the acquisition
>>>> of
>>>> this card not as a purchase, but as a shift of assets from one form to
>>>> another.  So instead of $430 in the bank I now have a different asset,
>>>> namely $500 on the card.   Yes, it's true, I don't benefit until I spend
>>>> the
>>>> money.  But the same is true of money in the bank.
>>>>
>>>> But it's not really $500 on the card because I only spent $430 on it.
>>>> It is
>>>> exactly like a currency exchange, though it's not obvious to me why this
>>>> means my goal is a very complex one.   It seems pretty simple to have an
>>>> exchange rate and have the card denominated in some currency, say the
>>>> Gifta,
>>>> that is equal to .86 dollars.  When I buy something using the card I can
>>>> go
>>>> to the card's account and list the expenses in Giftas and they will be
>>>> automatically translated by the 0.86 factor.   (I assume that if I made
>>>> an
>>>> account denominated in, say GBP, that I would be able to get that to
>>>> translate to the USD that I use for my regular accounts; after all, this
>>>> is
>>>> something that is important to many people.)
>>>>
>>>> Now actually I realized that the solution I was fiddling with can be
>>>> made to
>>>> work. As I mentioned before, I made an account and created a security
>>>> and
>>>> tried to set its price using the price editor.  For some reason the
>>>> Price
>>>> Editor doesn't seem to do anything, but there is a column labeled
>>>> "Price" in
>>>> the account I made, and if I set this to 0.86 (which I have to do
>>>> manually
>>>> for every transaction, it seems) then things work as I was hoping.  (And
>>>> I
>>>> notice that prices I enter in the ledger appear in the price editor even
>>>> though the reverse doesn't seem to be the case.)   It would be even
>>>> nicer if
>>>> I could set the price once and have that same price stay in effect until
>>>> I
>>>> change it, rather than having to enter it again for each transaction
>>>> with
>>>> the default price being "1".
>>>>
>>>> Why do I care?  It's just so that my accounting correctly tracks my
>>>> expenditures in different categories.   I don't need to use accounting
>>>> software to do price comparisons, but if I want to know how much I spent
>>>> on
>>>> Widgets this year---and I buy some using the card---the number will be
>>>> inflated if I don't account for the discount.
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> --
>>>> Sent from:
>>>> http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
>>> Hmmmm.  Seems to me that you received a $70.00 gift along with the card.
>>> nvsoar
>>> _______________________________________________
>>> gnucash-user mailing list
>>>
>
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>
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