Well , in my personal opinion , an individual investor does not have to follow the so called best accounting practice adopted  in Business World ( if there is ) to keep your investment accounts and treatments. Afterall they are  ever changing too.

Though the world ( present trend )  prefers so called Fair Value kinda accounting, Individually one can adopt a more prudent approach to lower your costs of investments through Dividends . Hence u might not simply spend away the additional cash flow from Dividends by putting it back as your capital. And U cannot really say Dividend is a Gain when u suffer paper loss on stock u hold.

The other thing, why spend so much time to keep the investment accounts like the professionals, when the time could be spent on  R & D of the stocks u may want to buy ?

I kinda like the "  zero cost concept " of some forumers , though not actually practiced  by the so called accountants, I opt  for prudence  ( vs Fair Value ). Paper Gains could often turn into a paper loss.

After all  it is your hard earned money and it is your plan, hence keep it that way at your own comfort.

What is the point of having the best accounting records, but meanwhile  having the worst/ negative  returns on investments ? Is it your purpose of investing ? 

Not saying it is wrong to have other alternatives, after all  creative accounting does  occur in Business World.

And investments associate with risks. Having lower returns  with lower risks , does not mean it is wrong from the asset allocation point of view, if one's own wants and needs are fulfilled .

Regards

Many seem to misunderstand the simple message I am saying.

For those, saying dividend deduction is correct, do look at the end result shown by a reputable group like InsiderAsia.

We need to understand what's happening before we give judgement.

REMEMBER: MY ISSUE FROM DAY ONE IS THE PERCENTAGE GAIN.



Look at line 5, MyEG. It states the CHANGE IN VALUE SINCE ACQUISITION (%) is 93.5%.

InsiderAsia uses deduction dividends from cost method.
Purchase price is 44.5 sen.
Total dividends received from MyEG is 3.15 sen.
Price then for MyEg was 80 sen.

Question is the percentage gain since acquisition (93.5%) correct? ( Another question, if it is wrong why is InsiderAsia highlighting this % ? )

Working..

New cost after deducting dividends = 4450 - 315 = 4135
Share then was 80 sen.
Gain = 8000 - 4135 = 3865. ( Gain total is same. Doesn't make a difference if you add back dividends or minus dividends from cost)

BUT look at percentage gain now.
Percentage gain according to InsiderAsia = 3865 /  4135 = 93.5%.
Is that correct?
My answer is no.

See carefully.
If you divide the gain with the deducted cost, the percentage gain will be increase.
Simple maths.
You are dividing with a smaller number.
The correct answer should be 86.85%.

WHY?
You started with 4450. You collected dividends of 315. You sell at 80 sen.
Your gain is 3865.
You started with 4450. You gain 3865.
What is the percentage gain?
Percentage gain is 3865 / 4450 = 86.85%.

THIS IS MY ISSUE with deducting cost from dividends.

After deducting the cost, the percentage gain as shown by InsiderAsia increases!
Is this correct?

One cannot say there is different ways to count things and because it's different it is acceptable.
Different methods is acceptable ONLY if the end result is the same.

If deducting cost from dividends cannot produce a simple % gain correctly, what good is the method?

Lastly...
When you deduct cost from dividends, your cost will be zero.
Sounds acceptable and nice of course but we are talking about simple portfolio accounting here.
When the cost becomes zero, how will you account the next dividend?
Are you going to have a negative number for the adjusted cost of shares?