Q: Accounting for Stock Purchases

[Carla]

Ok, our company is starting to buy stocks for investment again. :(

As I was looking at our books and how the purchases were posted, it
dinged on me that stock trade fees are really not operating expenses,
but part of the basis of the stocks. They are accounted for when the
stock is sold.

Am I right in this? I should really debit the asset account for the
trade fee that Ameritrade charges and then expense it when the stock is
sold as part of the cost of sale?

The volume isn't significant, but I'd like to account for it properly.

Thanks.

[S.M. Serba]

Post by Carla
Ok, our company is starting to buy stocks for investment again. :(
As I was looking at our books and how the purchases were posted, it
dinged on me that stock trade fees are really not operating expenses,
but part of the basis of the stocks. They are accounted for when the
stock is sold.
Am I right in this? I should really debit the asset account for the
trade fee that Ameritrade charges and then expense it when the stock is
sold as part of the cost of sale?
The volume isn't significant, but I'd like to account for it properly.
Thanks.

Yes, they should be added to the cost of the stocks. In addition, they
will also be deducted from the value when charged again when the stocks
are sold.

Stephanie