Exchange rate differences

At the latest when the accounting period is being closed, the currencies need to revaluated in Basic currency, creating adjustment transactions for exchange rate loss or gain, due to the fluctuations of the exchange rates (for the theoretical aspects, please check Revaluations and exchange rate differences).

The Create transaction for exchange rate variation... command, from the Account2 menu, calculates the revaluations for the foreign currencies accounts.

Date of the transactions for the exchange rate differences
Enter the date your exchange rate differences transactions should have.

The program will suggest the final date of the current month, related to the last entered transaction.

If there are transactions for exchange rate differences with the same date, the program asks whether they should be replaced.
The program considers the transactions for the exchange rates differences as existing if they have the same date, doc, description, accounts and currency and when there is no amount in the account currency.

Document number
Enter the document number your exchange rate differences transactions should have.

Use historical exchange rates (exchange rate rows with date)
For the calculation of the exchange rate differences, the program uses the exchange rates of the Exchange rate table without a date (the most recent exchange rates). With the option Use historical Exchange rates, the program instead uses the exchange rates of the Exchange rate table with an equal or earlier date than the one indicated.

Values used to create the transactions

For more information, we refer to our page Multi-currency transactions.

Amount of the transaction

  • Transactions for exchange rate differences are being created only for the accounts in foreign currency which, at the specified date, have a different balance in basic currency compared to the calculated one.
  • For the amount in basic currency, the difference between the account balance in basic currency and the account balance in foreign currency converted in basic currency is being used.

Account balance
For the calculation of the exchange rate differences, the balances in the account currency and in basic currency are being used, at the specified date.

Exchange rate profit and exchange rate loss accounts
As exchange rate profit and loss accounts are being used, in order of priority:

  1. The indicated accounts entered in the specific column of the chart of accounts.
  2. The exchange rate profit & loss accounts indicated in the File and Accounting properties.

Position of inserted rows
If, while imparting the command, you find yourself in the Transactions table, the rows are being inserted at the position of the cursor.
Otherwise, they will be inserted at the end or at the previous position in case they are replacing existing transactions.

Before using the command

  1. In the File and Accounting properties of the File menu, Foreign Currency section, make sure that the Exchange rate profit and loss accounts are being indicated. It is equally possible to indicate the same account for both the exchange rate profits or losses.
  2. Make sure that the accounts in foreign currency are being updated and that the balances in foreign currency of these accounts (for exemple bank accounts) correspond with the balance indicated by the bank.
  3. Update the current exchange rates of the Exchange rate table.
    You should indicate the closing exchange rates or those of a period's end in the rows without a date, in the Exchange Rate column (do not modify the opening exchange rate in the Rate Opening column). In order to calculate the Exchange rate differences, the program uses the exchange rates of the rows without a date. If these last ones are absent, the program gives an error message.
     


Exchange rates for the New Year

To have the Opening balances of the New Year in Basic currency correspond exactly with the closing balances of the preceding year,  the Opening Exchange rates of the New Year, indicated in the Exchange Rate table, have to be the same as those being used for the closing of the accounting, so:

  • The closing exchange rates have to be indicated in the Exchange rate column of the rows without a date;
  • The opening exchange rates have to be indicated in the Rate Opening columns of the roes without a date.

The procedure of creating a new year or of the updating of the opening balances, copies the closing balances (Exchange rate column, rows without date) of the previous year into the opening exchange rates (Exchange rate table, Rate Opening column,  rows without date) of the new year's file.

 

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