Average Cost Base Calculator

Average Cost Base Formula:

\[ ACB = \frac{\text{Total Cost}}{\text{Total Shares}} \]

Average Cost Base (ACB):

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1. What is Average Cost Base?

Average Cost Base (ACB) is a method used to calculate the average cost per share of an investment when multiple purchases have been made at different prices. It represents the weighted average price paid for all shares owned.

2. How Does the Calculator Work?

The calculator uses the Average Cost Base formula:

\[ ACB = \frac{\text{Total Cost}}{\text{Total Shares}} \]

Where:

$ \text{Total Cost} $ — Sum of all purchase amounts including commissions ($)
$ \text{Total Shares} $ — Total number of shares owned

Explanation: This calculation provides the average price paid per share across all purchases, which is essential for determining capital gains or losses when selling investments.

3. Importance of ACB Calculation

Details: Accurate ACB calculation is crucial for tax reporting, determining capital gains/losses, making informed investment decisions, and tracking portfolio performance over time.

4. Using the Calculator

Tips: Enter the total amount spent on all share purchases (including fees) and the total number of shares acquired. Both values must be positive numbers greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What costs should be included in Total Cost?
A: Include all purchase prices, brokerage commissions, transaction fees, and any other costs directly associated with acquiring the shares.

Q2: How is ACB used for tax purposes?
A: ACB determines the adjusted cost base for calculating capital gains when shares are sold. The difference between selling price and ACB determines taxable gain or loss.

Q3: Does ACB change when I buy more shares?
A: Yes, each new purchase recalculates the ACB by adding the new cost to the total cost and new shares to the total share count.

Q4: What if I sell some shares?
A: Selling shares doesn't change the ACB of remaining shares. The ACB remains the same until you make additional purchases.

Q5: Are there different cost basis methods?
A: Yes, other methods include FIFO (First-In-First-Out) and specific identification, but average cost is commonly used for mutual funds and systematic investment plans.