Re: Accounting Fees
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Posted by Clive on April 04, 2000 at 12:26:48:
In Reply to: Re: Accounting Fees posted by Mark on April 03, 2000 at 23:50:32:
: : I'm not sure of the correct method to enter the following transaction and end up with the correct adjusted cost base:
: : This is a first time purchase of this no-load mutual fund.
: : It has a one-time account opening fee of $40.00
: : Total investment, including one-time fee is $5000.00
: : Share price $15.79
: : Total shares received 314.1229
: : Please comment.
: : Regards,
: : Clive
: Hi Clive,
: You could choose to enter this account fee as a commission fee on
: this initial purchase, or you could enter it as a separate transaction.
: case 1:
: buy transaction for 314.1229 shares at 15.79 for $4960, and a commission fee of $40.
: case 2:
: buy transaction for 314.1229 shares at 15.79 for $4960.
: account fee transaction (non-reinvested) for -$40.
: Either case will be accurate, and give you the correct cost basis.
: Note the rounding errors here, you should record the value/shares accurately,
: and let the share price "float". See "Recording Transactions Without Rounding
: Errors" in the online help.
: Mark Beiley
: Fund Manager for Windows 3.1x/95/98/NT
I tried both of your suggested methods, however I get different cost basis values.
Case 1: I get a cost basis of $5,000
Case 2: I get a cost basis of $4,960
I think the correct cost basis calculation is $5,000 which includes the accounting fee. But for some reason the case 2 method does not include the accounting fee in the cost basis calculation.
Please comment on this.