"Dave" wrote in message
...
On Mon, 24 Nov 2008 16:08:51 -0800, "Capt. JG"
said:

It's funny money unless
you sell or reallocate. Did you actually attend accounting 101? LOL

The difference apparently is that my learning on the topic didn't end 35
years ago.


Your rant has absolutely nothing to do with losing or not losing money on
a
401K portfolio.

It did, however, have something to do with your suggestion that I don't
know
anything about accounting.

True. You do know something about accounting.


The only ways to lose money is for the underlying companies
to go belly up, you sell when the stocks are down, or similarly reallocate
your portfolio, e.g., into bonds from stocks, when the stocks are down.

What you paid for securities is a historical accident, just as the book
value of plant and equipment on an enterprise's balance sheet is a
historical accident. It has no current relevance. Securities you hold
today
are worth whatever a willing buyer would pay for them in an orderly sale.
Period.

Correct.

The decision to account for various assets at cost, market or some other
basis is the result of resolving the conflicting accounting concepts of
certainty and relevance. The accounting convention calling for PPE to be
valued at depreciated cost represents a tilt toward certainty, since cost
is
easily determined, and market value is less so. In the case of securities
held for sale, and having a readily determinable market value, the balance
is tilted the other way.

The key phrase is "for sale." If you're not selling the items in your 401K,
you're not making a profit or a loss.

I will tell you that during the current year I have discovered errors by
two
major bank accounting firms requiring a restatement of the numbers they
had
previously audited and given a clean report on. When I analyzed the
accounting treatment for them they agreed and restated.

And your point?

But you just go ahead and tell yourself you haven't lost anything if that
makes you feel better.

Please show me how I would account for my supposed 401K losses when it comes
time to file my return. Should I deduct the $100K? LOL

--
"j" ganz @@
www.sailnow.com