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Posted by Jay M Apple on May 24, 2007, 11:31 am
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[Running QknDlx 2006 on Win2000 SP4]
How does Q deal with stock splits?
I know when I add a split that Q adjusts accordingly cost basis and share
amounts of all previously acquired lots of the stock still on hand.
Is that adjutsment stored with the lot info? ...or calculated on the fly?
If multiple splits over time recorded, does Q keep a history if calculations
are not on the fly?
If I delete a split, will cost bases and share amounts be readjusted back to
previous?
If I delete multiple splits for a stock will bases be adjusted accordingly?
ISSUE: I have investments where I needed to delete multiple splits and the
resulting cost bases seem to not have been returned to initial amounts.
Thanks
JAY
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Posted by R. C. White on May 24, 2007, 3:33 pm
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Hi, Jay.
Still fighting that AT&T History puzzle? :-[
Remember some of our grade-school arithmetic lessons. When adding or
multiplying, the sequence of the numbers doesn't matter. 3 * 4 * 5 = 60 is
the same as 5 * 3 * 4 = 60; 3 + 4 + 5 = 12 is the same as 4 + 5 + 3 = 12.
But, when subtracting or dividing, the sequence makes a BIG difference! 5 -
(4 - 3) = 4 is much different from (5 - 4) - 3 = -2! And (3 / 4) /
5...well, you get the idea.
In tracing stock histories, so long as we are just buying more shares, the
sequence might not matter much. But when we sell some (but not all) shares,
the sequence becomes important. And when there is a split (think:
division), the sequence is critical. When we combine splits with partial
sales, then there are no shortcuts. :>(
All the transactions must be dated in the proper chronological sequence.
And, when deleting transactions to re-enter them correctly, the deletions
must be in strict REVERSE chronological order. Otherwise, we may be trying
to split shares that we've already sold, or to sell shares that we don't own
yet. Recording a split, then another split, then a sale, will get you a
different answer than recording a split, then a sale, then another split.
Let's try a simple example and see what we get. Buy 100 on 1/1/2001. Split
2-for-1 on 1/1/2002. Sell 50 on 1/1/2003, leaving 150. Split again 3-for-1
on 1/1/2004. Now hold 450. But, if we didn't know about the sale in time
to record it, we would show 100 * 2 * 3, for a total of 600. Now we learn
about the sale. If we record the sale of 50 as of today, we are left with
550, which is obviously wrong. Because of the missed split, we would have
to record a current sale as 150 shares, to get us down to 450. That fixes
the number of shares, but what about the BASIS? If the original cost was
$10 per share, the basis for the 50 we sold after the first split would have
been $5; our basis in the remaining 150 shares would have been $750 ($5 per
share). After the final split, our 450 shares would still have the $750
basis, or $1.67 (5/3) per share. We could mis-calculate basis in several
ways if we try to record the missed sale out of sequence. We might record
the sale of 50 at the original $10 basis if we didn't know about the first
split. Then our remaining balance would show as 50 shares at a remaining
basis of $500, and our later split would give us 450 shares at the $500
total cost, or just $1.11 each. And, of course, the gain or loss we
reported on the sale of the 50 shares would be wrong and we would need to
file an amended return for that year. If we don't, then our gain or loss
will be reported wrong when we sell some of all of the remaining 450 shares.
The only good way to fix our accounting in Quicken is to delete the last
split, then record the sale, and then enter the split again.
All this stuff is not hard. It's just tedious. But, as the old saying
asks, "Why is there never enough time to do it right the first time? But
there's always time to do it over again." :>(
At least, that's my opinion. Others may disagree.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> [Running QknDlx 2006 on Win2000 SP4]
>
> How does Q deal with stock splits?
>
> I know when I add a split that Q adjusts accordingly cost basis and share
> amounts of all previously acquired lots of the stock still on hand.
>
> Is that adjutsment stored with the lot info? ...or calculated on the fly?
>
> If multiple splits over time recorded, does Q keep a history if
> calculations
> are not on the fly?
>
> If I delete a split, will cost bases and share amounts be readjusted back
> to
> previous?
>
> If I delete multiple splits for a stock will bases be adjusted
> accordingly?
>
> ISSUE: I have investments where I needed to delete multiple splits and
> the
> resulting cost bases seem to not have been returned to initial amounts.
>
> Thanks
>
> JAY
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Posted by Jay M Apple on May 25, 2007, 10:24 am
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> Hi, Jay.
>
> Still fighting that AT&T History puzzle? :-[
>
As Tiny Tim is quoted as saying, "God bless, us everyone!" PLEASE??
>
>>>>>>>>>>>>>>SNIP Very,Very, VERY valuable stuff >>>>>>>>>>>>>>>>
>
> All this stuff is not hard. It's just tedious.
>
As Igor mumbled to the good Dr, F., "Yes, master!", and trundled down the
road to dig some more in the cementery...
>
>But, as the old saying asks, "Why is there never enough time to do it right
the >first time? But there's always time to do it over again." :>(
>
Because SIL (sister-in-law) kept finding stuff after I jumped into the
fray...
>
> At least, that's my opinion. Others may disagree.
>
> >>>>>>>>>>>SNIP>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
And before someone pipes up with some appropriate aphorism or the other...
Fools march in where angels fear to tread
Yea, verily, amen and out.
Thanks R.C.
Jay
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