Trading accounts and year-end operations

[Elena Khrissanova]

Hello fellow gnucash users,

 I've posted similar question earlier (about a year ago), but hasn't
got any replies. Now new things piled up, so I'm hoping someone
knowledgeable can figure it out.

First, I use trading accounts for our business, because we have bank
accounts/expenses in two currencies (CAD and USD, CAD being main one).
I assume I use them correctly: all transaction involving two
currencies go through trading accounts.
Second, at the end of financial year I'm running balance statement and
income statement reports.
After first year when we started using two currencies it was simple.
On balance sheet below Equity section  there was a line named "Trading
losses". The amount on that line decreased Equity, so Total Equity was
equal to difference between Retained Earnings and Trading Losses. So
far so good.
How do we get Retained Earnings amount? My assumption is that we take
last year retained earnings, add all income, deduct all expenses.
We don't pay dividends, so, if I'm not mistaken, our Equity equals to
our Retained Earnings.

After first year report was filled out, I've created and submitted T2
(Canadian Corporation Income Tax Return). I've included Trading Losses
as Unrealized Gains/Losses (field 9980 on schedule 100 to be exact).
so my Retained Earnings at the end (field 3849 on same schedule) was
equal to Total Equity mentioned above. Very well, I've closed that
first year books (after I've added Income Tax Payable, of course).

Second year comes. I'm running balance sheet, and what do I see? My
Retained Earnings are calculated as if there were no Trading Losses at
all. Last year closing amount (BEFORE applying trading losses) is
taken, and net income is added to it. How does that work? My T2 for
last year showed amount including trading losses. When you filling
Income Tax Return, you're supposed (I believe) transfer amount from
previous year filed 3849 (Retained earnings (deficit) - end) into this
year field 3660 (Retained earnings (deficit) - start). And in this
case I cannot do that, because my current year balance sheet report
uses different amount for Retained Earnings - Start.

So, basically, what do I do now? If I use adjusted total equity from
last year, then trading losses for this year definitely need to be
adjusted. If I was supposed to record trading losses for last year -
how and where?

Quoting Peter Selinger, author of (only) trading accounts tutorial,

"A currency trading account reflects currency exchanges made in the
past, and in an ideal situation where exchange rates never change, its
balance is supposed to be zero. However, as the exchange rate
fluctuates, so does the value of the currency trading account, and
such fluctuations correspond exactly to currency gains and losses. At
the end of an accounting period, one may move the actual ("realized")
gain or loss to an income or expense account denominated in the
reference currency."


His suggestion was that we one may do it, but was it ever implemented?

Best Regards,

Elena Khrissanova