Exchange rate changes lead to imbalance

[Derek Atkins]

Mike Alexander <mta at umich.edu> writes:

> --On August 28, 2009 4:46:42 AM -0700 Dolfy <d01fy at yahoo.com> wrote:
>
>> Hello,
>>
>> Ver. 2.2.6
>>
>> If you have multi-currencies or have stocks on your balance sheet,
>> and their daily rate changes, the balance-sheet will go out of
>> balance. Example:
>>
>> I have 1 Eur only, and my B/S is in HUF currency.
>>
>> Assets:   HUF 280
>>    EUR:   EUR   1
>> Equity:   HUF 280
>>
>> Now if the exchance rate changes from 1 EUR=280 HUF to 1 EUR=290HUF,
>> I will have
>>
>> Assets:  HUF 290
>>    EUR:  EUR   1
>> Equity:  HUF 280
>>
>> which is clearly out of balance. Same with stocks and other
>> commodities. Maybe some balancing transactions had to be introduced
>> to handle this properly...
>
> This is probably because of the issues described at
> <http://www.mathstat.dal.ca/~selinger/accounting/tutorial.html> and
> <http://www.mathstat.dal.ca/~selinger/accounting/gnucash.html>.  I've
> implemented some of the suggestions in the latter document, but the
> patch has never become part of the official Gnucash and is now
> somewhat out of date.

Actually I'm not sure /this/ issue is related.  The issue here is that
you have 1 EUR and you're trying to determine how many HUF that 1 EUR is
worth.  But you bought that 1 EUR for 280 HUF, and now it's worth 290
HUF.  So you have an unrealized gain of 10HUF.

Mr. Selinger doesn't handle unrealized gains at all...  This particular
issue does fall through the cracks there.

I suspect that the issue here has fallen through the cracks of the reports.

>       Mike

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-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available