Investment Accounting Opening and Closing the Year

Beginning of the year

At the beginning of a new accounting year, make sure that the opening quantities and values of the investments in the Items table are consistent with the corresponding opening balances.

When a new accounting year is created from the previous year, Banana Accounting automatically carries forward the closing investment data and account balances required as opening values for the new year.

If you need to add a new security manually, enter its opening information in the Items table and make sure that its opening value is consistent with the opening balance of the Investment Balance Sheet Account specified in the Asset Account column.

Add a new security

To manually add a new security at the beginning of the accounting year, define it in the Items table and enter its opening values:

• Begin Qt. – Enter the opening quantity of the security. For bonds, enter the opening nominal value.
• Price Begin – Enter the opening unit price of the security.

Banana Investment Accounting automatically calculates the Value Begin based on the values entered in Begin Qt. and Price Begin.

In multi-currency accounting, the corresponding opening value in the base currency is also calculated automatically.

Matching Opening Values with the Investment Balance Sheet Account

The total opening value of the securities must correspond to the opening balance of the Investment Balance Sheet Account specified in the Asset Account column of the Items table.

If multiple Items are assigned to the same Investment Balance Sheet Account, the sum of their Value Begin amounts must equal the opening balance of that account.

For example, if two shares are assigned to the same Shares CHF account, the sum of their opening values in the Items table must correspond to the opening balance of the Shares CHF account in the Accounts table.

This correspondence keeps the investment values in the Items table and the related balances in Financial Accounting aligned.

The following image shows that the opening values in the Items table correspond to the opening balance of the related Investment Balance Sheet Account in the Accounts table.

Opening Exchange Rate

In multi-currency accounting, Banana Investment Accounting automatically calculates the Value Begin of each security in the base currency using the applicable opening exchange rate.

The same opening exchange rate is used to calculate the opening balance of the corresponding Investment Balance Sheet Account in the base currency. This allows the opening Value Begin amounts of the Items and the opening balance of the related Investment Balance Sheet Account to remain consistent.

For more information about the values calculated in the Items table, see Data calculated automatically.

Check initial balances

After entering the opening values, you can verify that the opening values of the securities correspond to the opening balances of the related Investment Balance Sheet Accounts:

• Use the Actions > Check Accounting command. Select the Items and Asset accounts opening balances options.

• Use the Check balances report extension to verify that the opening values of the securities are consistent with the corresponding opening accounting balances.

End of the Year

At the end of the accounting year, enter the current Market Price of the security in the Price Current column of the Items table, normally using the year-end market price.

Banana Investment Accounting automatically calculates the Market Value:

Value Current = Current Qt. × Price Current

The Current Qt. is automatically updated based on the investment transactions recorded during the year.

The resulting Value Current represents the Market Value of the investment.

Closing Exchange Rate

In multi-currency accounting, Banana Investment Accounting automatically calculates the Value Current of each security in the base currency using the applicable current exchange rate.

This allows the Market Value of investments to be expressed in the base currency and used when calculating the required year-end valuation adjustments.

This is particularly important when determining the difference between the current Book Value and Market Value of foreign-currency investments.

Create Adjustment Transactions

Before closing the accounting year, make sure that all required valuation adjustments have been recorded.

You can use the Create adjustment transactions extension to automatically calculate and create the required adjustment transactions based on the difference between the current Book Value and the Market Value of each investment.

The extension records the adjustment in the Investment Balance Sheet Account specified in the Asset Account column of the Items table, using the appropriate Investment Value Adjustment Account as the corresponding account.

After the adjustment, the Book Value of the investment corresponds to its Market Value. Consequently, the balance of each Investment Balance Sheet Account should correspond to the sum of the Value Current amounts of all Items assigned to that account.

To verify the balances, compare:

• the current balance of the Investment Balance Sheet Account in the accounting records
• the Value Current of the related Items in the Items table.

If multiple Items are assigned to the same Investment Balance Sheet Account, its balance should correspond to the sum of the Value Current amounts of all Items assigned to it.

In this example, the corresponding values in the Items table confirm that the Item values are consistent with the balance of the related Investment Balance Sheet Account.

Recording the adjustment using a separate Balance Sheet account

If required by the applicable accounting treatment, auditing requirements, or reporting structure, the valuation adjustment may be recorded in a separate Balance Sheet account instead of directly adjusting the Investment Balance Sheet Account specified in the Asset Account column.

In this case, you can:

• manually record the adjustment transactions
• modify the account used in the transactions generated by the Create adjustment transactions extension.

The Price Current should continue to represent the current Market Price of the investment, and Value Current therefore continues to represent its Market Value.

When the valuation adjustment is recorded in a separate Balance Sheet account, the balance of the Investment Balance Sheet Account alone will not correspond to the Value Current of the related Items. The separate Balance Sheet account used for the valuation adjustment must also be taken into account when reconciling the accounting values with the Market Value of the investments.

Creating a New Accounting Year

When you create a new accounting year using the Create New Year command, Banana Accounting automatically carries forward the closing values required for the new accounting year.

For each Item:

• the closing Current Qt. becomes the Begin Qt. of the new year
• the closing Price Current becomes the Price Begin of the new year.

The closing balances of the Investment Balance Sheet Accounts are also carried forward as opening balances for the new accounting year.

The opening Value Begin amounts of the Items should therefore be reconciled with the corresponding opening balances. When valuation adjustments are recorded directly in the Investment Balance Sheet Accounts, the Value Begin amounts should correspond to those account balances. When valuation adjustments are recorded in separate Balance Sheet accounts, the balances of those accounts must also be taken into account.

After creating the new year, use the Check balances report to verify the consistency between the opening values of the Items and the corresponding opening balances.