P&L Calculation

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zamboni

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Hello - Can you assist with below? Definitely overthinking but cannot come up with correct calculation for below

On March 1, 2021, the fair market value of XYZ Co's assets held at its Citi account is $10,200,000.
On March 15, 2021 XYZ Co uses $1,000,000 cash held at Citi to buy shares that the company then holds in Citi.
On March 25, 2021, XYZ Co transfers $1,750,000 from the bank to Citi and transfers $6,500,000 worth of options from its Citi account into its account at Mizuho.
Broker fees for the month of March were $500,000, all paid out of the Citi account in March. On March 31, 2021, the fair market value of XYZ Co's assets held at Citi is $5,000,000.
Assuming no other deposits or withdrawals to HSBC that month, what is the March 2021 Trading PnL at Citi?
 
zamboni said:
Hello - Can you assist with below? Definitely overthinking but cannot come up with correct calculation for below

On March 1, 2021, the fair market value of XYZ Co's assets held at its Citi account is $10,200,000.
On March 15, 2021 XYZ Co uses $1,000,000 cash held at Citi to buy shares that the company then holds in Citi.
On March 25, 2021, XYZ Co transfers $1,750,000 from the bank to Citi and transfers $6,500,000 worth of options from its Citi account into its account at Mizuho.
Broker fees for the month of March were $500,000, all paid out of the Citi account in March. On March 31, 2021, the fair market value of XYZ Co's assets held at Citi is $5,000,000.
Assuming no other deposits or withdrawals to HSBC that month, what is the March 2021 Trading PnL at Citi?
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It seems like total should be 4.95mm
The 1mm buy I believe is offsetting since the shares stay within Citi
Gain of 1.75mm and subtract outgoing of 6.5mm. 500K outgoing for fees but unsure if that should be included in actual p&l.

not seeing how the 5mm is the market value at end of month

10.2mm - (-1mm+1mm)

-(4,750,000)

Total 5.4mm or 4.95mm (if including the broker fees)

Obviously going wrong somewhere here, any assistance would be appreciated
 
Well you have not told us what accounting standards are being used: I doubt anyone here has a clue what accounting standards apply in China. So you really should ask this question on an accounting help site that works with the relevant accounting standards.

Also the brokerage fees number looks weird. XYZ made a purchase of 1 million and paid a brokerage fee of half a million? Of course, perhaps the brokerage fees covered transactions at other banks. If that is the case, it does not make any accounting sense to me to allocate the brokerage fees associated with transactions at other banks to the Citi account.

Consequently I have little confidence in my answer.

10.2 million starting balance at Citi.
1 million of cash at Citi used to buy securities held at Citi (not a transaction that hits an income statement account or the Citi total)
1.75 million transferred in (not an income transaction)
6.5 million transferred out

Adjusted starting balance 10.2 + 1.75 - 6.5 = 11.95 - 6.5 = 4.5 million

Ending balance = 5 million

Net earnings on Citi account

5 - 4.5 = 0.5 million

Brokerage fees represent - 0.5 million.

Therefore Trading gains = 1 million
 
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