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can average cost per share be changed manually under portfolio investment view? [Canada]

questionsforever

I see under average cost per share a value under the investment→> portfolio view tab for my various stocks. Is there a way to adjust this value manually?

Also, I notice this value says 'average cost per share', but is it not calculated using FIFO method since when you buy or sell shares the open position lots remaining is adjusted from the lowest priced or oldest lot and not taking an actual running average cost per share? Thanks.

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QWIN - Canada

Comments

Tom Young

"I see under average cost per share a value under the investment→> portfolio view tab for my various stocks. Is there a way to adjust this value manually?"

The only way to do that is to go into an Account and make some sort of cost basis change or number of shares change. The column seems to be a simple calculation of (total cost of shares / number of shares.)

"Also, I notice this value says 'average cost per share', but is it not calculated using FIFO method since when you buy or sell shares the open position lots remaining is adjusted from the lowest priced or oldest lot and not taking an actual running average cost per share?"

I'm not really following along with what you're saying here. The calculation is very simple and while the costing method used for sales (FIFO, LIFO, selected lots) affects the calculation of average cost per share in that the numerator (total cost) is changed and denominator (# of shares) is changed, it's still a valid calculation for the shares you have left.

q_lurker

Can average cost per share be changed manually under portfolio investment view?

As @"Tom Young" indicates, No - at least not with other efforts. I agree with his assessment that the value is simply current cost divided by current shares. But a few other additional thoughts, since I am not clear what you are after.

US tax laws permit using "average cost" when selling shares of mutual funds and for a few other select cases. (Canadian rules may be different.) To that direction, Quicken has a provision for setting the preference for a mutual fund to use average cost when computing capital gains. But even with that consideration, I believe the Average Cost per share in a portfolio view may be considered a different presentation. It is not something I have researched in depth.

The column header is Average Cost per Share. I believe that is a shortened version of average cost basis per share. Cost basis is original cost adjusted for any return of capital so there can be a difference, usually small. The Cost Basis column will reflect that adjustment, so using that column and the shares column should confirm the presented value.

You seem to be looking at a situation where, for example, you now have 100 shares with a cost basis of $1,500 showing an average cost per share of $15/share. But you recently sold 100 shares that had a cost basis of $1,000. You'd like the Average Cost per share to reflect both the current shares and the sold shares, 200 shares at a cost of $2,500 for an average of $12.50 per share. Stated another way, before the sale, the average cost was $12.50. After the sale, you want to see that same value. Aside from more selectively selecting the sold shares to have also had a $12.50/share basis, there is no easy way to accomplish that.

Please feel free to comment if I/we have misinterpreted your question or if you can clarify your situation and wants or if we need to clarify anything.

questionsforever

"Stated another way, before the sale, the average cost was $12.50. After the sale, you want to see that same value. Aside from more selectively selecting the sold shares to have also had a $12.50/share basis, there is no easy way to accomplish that."

Yes..just basically asking if that column (and also Quicken portfolio value & cost basis report) is doing a FIFO or average cost basis calculation. You say that without selection, it does not do a real average cost calculation, therefore I conclude it is FIFO for the remaining cost basis of open shares. And yes, this only occurs if you buy, then sell a partial amount, then buy back a partial amount, then sell another partial amount, etc.. I imagine if you bought once and then just kept selling it down one share at a time, the average cost of remaining share = average cost method as the entire lot is the first one.

q_lurker

Caveat qualifier: Regular 'stock', not mutual fund. US Quicken.

When you sell a security, Quicken defaults to selling FIFO. The user can override that and specify any selection of shares from various lots.

The Average cost per share is going to be the remaining cost basis divided by the remaining number of shares. There is nothing about that calculation, nothing about that column, that is FIFO or any other scheme. That consideration occurs on the sale transaction.

While accepting a downloaded sale transaction 'offers' to use average cost or specify lots, I have no idea how selecting average cost behaves, not for capital gains on that transactions and not for subsequent presentations. (FWIW: I always specify lots unless I am selling the entire holding in that account.)

questionsforever

"The user can override that and specify any selection of shares from various lots."

Out of curiosity, How do you do this? I am entering the sales manually in the register. Is it different if I were to download them?

Tom Young

https://community.quicken.com/discussion/comment/20376869#Comment_20376869

IF you have multiple lots then Quicken defaults to FIFO, but you don't have to stick to this, you can select specific lots to make up the sale, but you must tell your broker this information before the settlement date.

When you enter the sale you simply click on that "Specify Lots" button:

q_lurker

Using the Enter Transactions button, or the in-line transaction list entry, see the highlighted Specify Lots buttons.

Then inline specify lots button will not appear until you specify the security and the number of shares sold, which must be less than shares owned. Similarly, the pop-up frame will have the specify lots button grayed out until security and shares indicates a partial sale.

questionsforever

Oh I see, this is for US quicken only. I use Canadian one. It is somewhat bizarre for Quicken to default to FIFO for Canadian quicken cost basis without any option to switch it on a per-sell transaction when Canada tax directive is average cost method for all taxable transactions for the entire country.

q_lurker

I would not be surprised if the Canadian cap gains report used a different calculation for average basis than the portfolio view, but I do not know that for a fact. I suggest a trial sale to see what happens.

I do know that US Quicken for a mutual fund selling shares at average cost still sells the shares in a FIFO order, even when not using the cost of those shares. But again, I don’t know about the subsequent sales reporting cap gains.

questionsforever

I just mean how does Quicken calculate 'total cost of shares'? Is there some explanation of the algorithm?

Say I buy xyz 1 share at $100

and another 1 share at $200

then I sell 1 share at $300

Is the cost basis = ($200 + $100 / 2) = $150

Sell 1 share at $300 → no change to cost basis of $150 average (AVG-COST) for remaining 1 share?

Sell 1 share at $300 → sell it from the lowest priced lot of $100 (FIFO)→ cost basis of remaining 1 share is $200 ?

This would make a huge difference to average cost per share if Quicken uses $150 vs $200 as the cost basis in this example.

Jim_Harman

You could answer this question for yourself by entering these transactions in a test file

questionsforever

Ok, i see what is up. you have to add column average cost per share. It seems to be average cost basis method not fifo, although the lot details in the stock by clicking the + icon beside the stock seems to remove the lowest cost lot, the average cost is really average cost.

questionsforever

I have done so. The result is ridiculous.

buy msft $320

buy msft $350

buy msft $310

portfolio view and cost basis report shows 3 msft shares with cost basis of $980.

The actual cost basis is $326.6

Then sell 1 msft share at $350

The cost basis shows $653.33

The actual cost basis is still $326.6

Then sell another 1 msft share at $400

The cost basis shows $326.6 for the remaining 1 share.

Finally correct. But every other intermediate step is quite incorrect.

q_lurker

What you are reporting as ‘Cost Basis’ is total cost basis of the MSFT holding; not per share. There is a separate column in portfolio views for ‘Average Cost per Share’ as you noted early this morning.