Currency accounts

[Kenneth Hoffmann]

"Statement 52 of the FASB, which is the principal accounting pronouncement
on foreign currency denominated transactions, takes a two-transaction view
to account for foreign currency denominated transactions. This approach
holds that the difference between the U.S. dollar cash flow at inception and
settlement of a transaction due to changes in "spot" rates (i.e., the rate
at which one currency can be converted into another) represents a foreign
exchange gain or loss to be included in income. If financial statements are
prepared as of a date before settlement of transaction, a gain or loss,
based on the change in spot rates between the inception date and the
intervening balance-sheet date must be included in income for the current
period." --

regards
ken


----- Original Message -----
From: "J. Milgram" <milgram@cgpp.com>
To: "gnucash" <gnucash-devel@lists.gnumatic.com>
Sent: Sunday, January 28, 2001 9.16 PM
Subject: Currency accounts


>
>
> This might be more of an accounting question, but ...
>
> I recently sold something (from USA) to a customer in Germany. He paid
> me in DM which he held there for me. The DM were later picked up by a
> vacationing US-ian friend, who reimbursed me in USD. Due to exchange
> rate fluctuation I came out $50 ahead over the original sales price.
>
> I entered this according to instructions, with a DEM account and a
> trading account with security "DEM". All well and good, and I guess
> the books balance, but now it occurs to me that this $50 is not
> captured as income anywhere. It might just as easily been a loss that
> I'd want not to be taxed.
>
> What's the correct way to handle this so everything looks right at tax
> time?
>
> thanks
>
> Judah
>
> Judah Milgram                             milgram@cgpp.com
> College Park Press                        http://www.cgpp.com
> P.O. Box 143, College Park MD, USA 20741  +001 (301) 422-4626 (422-3047
fax)
>
>
>
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