Multiple currency issues

Tue Jul 8 20:10:00 EDT 2008

Charles,

thanks for your input. Much appreciated.

On 09.07.2008 01:09, Charles Day wrote:
> On Tue, Jul 8, 2008 at 6:00 AM, Jannick Asmus <jannick.news at gmail.com 
> <mailto:jannick.news at gmail.com>> wrote:
> 
>     The issues listed below appear with multiple currency transactions.
>     A sample file is attached with the following example:
> 
>     Cash (USD): 78 USD
>     Other Income: 49,62 EUR (w.r.t. some FXR)
>     EUR is the main currency.
> 
> 
>     1. The transaction is shown in the currency of the opened account,
>     i.e. when "Cash (USD)" is opened, then the transaction is shown
>     completely in USD (here: 78 units). When, in contrast, the
>     transaction is shown in the general ledger, the transaction is not
>     shown in the main currency (here: EUR).
> 
>     Q1: Is is possible to let GnuCash show the currency of the opened
>     account (e.g. by choosing an option)?
> 
> 
> I don't know the answer for sure, but I think it is "No".

I think this could be a good enhancement to make the user aware of the 
currency GnuCash expects for the entries of EVERY transaction line. 
Maybe there could be a bug filed on that.

Any comments on that?

>     Q2: Is there a special the reason why the currency in the general
>     ledger view is not the main currency?
> 
> 
> I think by default the G/L shows each debit and credit in the currency 
> of the affected account. But in the report options you can select 
> General->Common Currency and pick EUR.

You are right with regard to the reports. But in my version the G/L 
shows each line of the transaction with multiple currencies just in one 
single currency which is *not* the main currency in the sample (here: 
the transaction is shown in USD whereas the main currency is set to EUR 
in General > Common Currency).

>     2. Income statement
> 
>     The income statement in USD shows a total revenue of 0, expected is
>     78, whereas the P&L in EUR is ok.
> 
>     Q3: Is this because GnuCash expects a foreign exchange rate in the
>     database to convert USD into EUR?
> 
> 
> I couldn't reproduce this in trunk. My income statement shows total 
> revenue of 78 if you run with USD, or total revenue of 49.62 if you run 
> with EUR. This worked with price sources "Average Cost" or "Weighted 
> Average". If you chose a "Most Recent" or "Nearest in time" then I think 
> you need some quotes in the Price Editor.

You are right. Can confirm results run with "Weighted Average". But it 
seems to me that the zero results are calculated because the price-db 
does not contain a conversion rate for EUR -> USD, whereas there are 
price-db entries for USD -> EUR.

Is it intended that the conversion direction in the price-db cannot be 
reversed?

>     3. Balance sheet report
> 
>     The balance sheet report in USD shows a total of assets of 78USD and
>     a total of liabs and equity of 0. In particular retained earnings
>     (as part of equity) are 0.
> 
> 
> When generating the balance sheet in USD with a price source of "Most 
> Recent" and to quotes in the Price Editor, I get the same results. 
> However, the report works fine for me with the "Weighted Average" price 
> source.

Confirmed.

>     Q4: Is this a bug? I would expect retained earnings to be the
>     balancing item here.
> 
> 
> Obviously it should balance... We are running with a price source of 
> "Most Recent" and no Price Editor quotes, so the exchange rate is zero. 
> Therefore the retained earnings of EUR 49.62 are worth USD 0. So the 
> retained earnings line is correct (given the zero exchange rate). It 
> seems to me that you should see an unrealized currency gain of USD 78 to 
> balance the report.

"Weighted Average" gives this result in my version.

> In 2.2.5, the balance sheet only calculated unrealized gains/losses on 
> assets. In trunk the balance sheet calculates unrealized gains/losses on 
> assets and liabilities. I have to run out the door at the moment, but 
> perhaps you could provide a suggestion as to how to fix this.

I think this should work with the new version of the UGL calculation.

If I remember correctly retained earnings are defined as profit of the 
period to date, i.e. RE = revenues - expenses.

I don't want to make complicated things more complicated, but I am 
asking myself how GnuCash reconciles FXR fluctuations applied to 
accounts of the income statement with FXR applied to balance sheet 
items? Is there an additional balancing item needed due to FXR 
fluctuation during the accounting period?

I am sorry for bringing this issue up now when the discussion on FXR is 
already pretty much advanced. Unfortunately I could not follow all the 
details from the beginning.

> -Charles

J.

>     BTW: The balance sheet in EUR is balanced. Net income is recognized
>     in retained earnings. I wait for some conclusion in another thread
>     how GnuCash calculates retained earnings and how it is related to
>     net profit.
> 
> 
>     Thank you for your input. If needed I can file a bug report on some
>     or all of the questions above.
> 
> 
>     -- 
>     Best wishes,
>     J.
> 
>     GC v2.2.5/WinXP
> 
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