Exchange rate changes lead to imbalance

Charles Day cedayiv at gmail.com
Sun Aug 30 13:51:12 EDT 2009


On Fri, Aug 28, 2009 at 4:46 AM, 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...
>

I just did this example myself, and the report balances. On the General tab
of the report settings, do you have "compute unrealized gains and losses"
checked?

As an aside, I don't understand why this option exists. If there are
unrealized gains, they should always be shown. It seems to me that the right
way to leave unrealized gains out of the balance sheet is to use the average
cost as the price source, so that unrealized gains calculate to zero.


> Thx, Dolfy
>

-Charles


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