[GNC] Valuation of multi-currency accounts

[Patrick Pöndl]

I guess it always depends on what you want to accomplish. If you are bound
by certain rules in your jurisdiction for tax purposes, you need to think
how to set up your accounts in GnuCash to obey those rules. If you are
bound by more than one jurisdiction with incompatible rules, maybe you even
need to keep track of the same transactions in two separate set of books in
order to stay sane.

I was just under the impression that the original poster who suggested that
GnuCash should automatically create multi-currency subaccounts for each
expense account was simply suggesting this in order to save time and
effort, but was not aware what that would do to the quality of the data the
more exchange rates change over time: ever larger balances on the trading
accounts (which tend to eliminate meaning from the numbers) and ever
smaller balances on the expense and income accounts in terms of the base
currency (which do give meaning to the numbers).

I guess one approach for people who don't want to (or can't for regulatory
purposes) convert to base currency for every single transaction would be
this: Enter a transaction from the expense/income account denominated in a
non-base currency to the same expense/income account denominated in your
base currency every so often (like once a year, or whenever exchange rates
changed significantly) to reset those accounts to zero. This way, at least
the problem of ballooning balances on the trading accounts would be solved
and the degradation of meaning of the numbers limited.

But as I said, I'm a newbie at GnuCash, and I don't have an accounting
background. I just realized that this problem exists while planning my own
initial setup of GnuCash, and I still hope that someone more experienced
shares a method that both minimizes work and the described problem.

Patrick Poendl

Am Fr., 21. Okt. 2022 um 04:45 Uhr schrieb <gnucash-user-request at gnucash.org
>:

>
> ---------- Forwarded message ----------
> From: Michael or Penny Novack <stepbystepfarm at comcast.net>
> To: gnucash-user at gnucash.org
> Cc:
> Bcc:
> Date: Thu, 20 Oct 2022 17:59:20 -0400
> Subject: Re: [GNC] gnucash-user Digest, Vol 235, Issue 46
> On 10/20/2022 12:21 PM, Patrick Pöndl wrote:
>
> THAT is the major issue with trying to keep multiple currencies in the
> same set of books. WHEN is to be the time of evaluation (of one to the
> other in terms of exchange rates). This can even be an issue for
> accounts of type asset and liability for those who are rarely moving
> amounts between currencies << who have accounts in both places, who have
> income and expenses in both places --- say who live/work in one country
> part of the year and in another the rest of the year >>
>
> Since not applying to me, I have never investigated the rules of the
> various jurisdictions. You have income in country B but your primary tax
> country is A. What does A say about when "conversion" takes place (when
> evaluated for income in B, taxes paid in B for which A might give
> credit, etc.) OR if A allows you to choose the date (say the end of the
> reporting year) how do you do that unless separate books? << since you
> would NOT want evaluations to have been taking place as you went along >>
>
> Michael D Novack
>
>
>