[GNC] asset discrepancy in change of year

[Christopher Lam]

Hi Michael,

On Sat, 27 Mar 2021 at 18:11, Michael or Penny Novack <
stepbystepfarm at comcast.net> wrote:

> There is an issue with keeping multiple currencies in the same set of
> books that I have not yet seen discussed in detail, Namely that exchange
> rates are not constant over time.
>

There is some discussion in an unusually detailed bug report
https://bugs.gnucash.org/show_bug.cgi?id=797796 -- this originates in
GnuCash's transaction currency being permitted to be any currency. e.g. if
your home currency is USD, but transfer GBP to EUR, the UI will record only
GBP/EUR fx. The new method would enforce the transaction currency to be USD
therefore your GBP->EUR would require GBP/USD and EUR/USD fx rates. Thus,
w.r.t. USD, all fx gains/losses are recorded accurately.

To fix this would be an enormous amount of work and invalidate a lot of
code, but would definitely simplify and fix a lot of code too IMHO.


> Let's say at time T when the exchange rate between $ and EUR is
> $1.30/1.00 EUR. You take 1000 EUR and buy 1300 dollars. At THIS point in
> time, just a transfer between assets, no transaction affecting
> income/expense, so no affect on equity. Let's say no transactions from
> then on.
>
> Now we come to the end of the year, at which point let's say the
> exchange rate is $1.25/1 EUR. Those $1300 are no longer worth 1000 Eur.
> They are worth 1040 EUR. Your equity has gone up by 40 EUR.
>
> I will stop here because the issue of how "unrealized gains/losses from
> changes in exchange rate" will be treated is not a gnucash issue. It's
> exactly the same no matter what accounting software you use or even old
> fashioned pen and ink on paper.
>
> Michael D Novack
>
>
>
>
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