TABLE OF CONTENTS

• Description
• How to set up theshold
• Methodology for deposit creation
  • Example
• Reviewing transactions created from threshold

Description

Often times when working with multiple sources for your digital asset transaction activity, there can be rounding differences between one source and another. This rounding difference can lead the cost basis function to create errors due to the small amounts of quantities missing in the cost basis process. To be able to automatically bypass these errors to keep the cost basis function processing, users can set an immateriality threshold for what rounding differences are acceptable. This is done by creating micro deposits at the exact time that the small rounding error occurs, so that the gap in quantity is fulfilled, and therefore cost basis can continue.

How to set up theshold

Under the Settings>Crypto section, complete the below fields:

Ledger Account- The Ledger Account for the Credit Side (not the Asset Account side) of the micro deposit being created. For instance a small deposit of Bitcoin would create a Dr. Bitcoin Asset and Cr. ACCOUNT SET HERE Journal Entry.

Threshold- The fiat amount in the set Crypto Home Currency for when to create a micro deposit that fixes the cost basis error produced from any rounding errors. Micro deposits created will only be for less than the amount set here (see methodology section below for more details).

Reference- The text to be set for the Reference field of the deposit created when one is required to fix the cost basis error.

Methodology for deposit creation

Once the settings in the above section have been set, this setting is considered active and when cost basis is run, so long as there is a deficiency of quantity that meets the set threshold, a deposit will be created to fix the error and continue cost basis.

Example

Let's say that you set the below as the inputs for the threshold settings:

With the above in place, any error that would have been produced from a deficiency in quantity for either the sent cost basis or fee cost basis with any asset where the (quantity needed)*(price) is less than 0.10 USD (this is the set Crypto Home Currency in this system), will create a deposit. The deposit will be created with account 110000 set for the Credit Side and "Deposit to fix rounding error" in the Reference field.

See the below error that is produced when there is no setting in place:

This error is in reference to needing 0.000005 quantity of Bitcoin to satisfy the cost basis requirement. In this example the price for the transaction that needs this quantity is $10,000, meaning that  0.000005 multiplied by $10,0000 is equal to $0.05, and therefore less than the threshold set of $0.10. With this setting enabled, this error would be satisfied by a micro deposit that looks like the below:

The above system transaction pulled the below from the transaction that caused the error from a deficiency in quantity:

1. Received Coin- this is the Coin from the Sent or Fee side that had the deficiency in the error (BTC in this example)
2. Received Quantity- The exact quantity of the error (0.000005 in this example)
   Per Coin Price - The price of the transaction that would cause the error ($10,000 in this example)
3. Date - The exact date of the transaction that would cause the error (2023-10-09 00:00:00 in this example)
4. Currency - The fiat currency set as the rate currency from the transaction that would cause the error (USD in this example)

And the below from the threshold settings on Settings>Crypto:

1. Ledger Account- Credit side for the Journal Entry (set as 110000 in this example)
   
2. Reference - Text set as reference ("Automatic Crypto Cost Basis Fix for Immaterial Amount (Fixes Tx #31251145) in this example)

Reviewing transactions created from threshold

A good way to review the transactions created through this process is to set a Saved View of the exact text entered in your threshold settings, such as the below: