[GNC] Currency Transfers result in Unrealized Gain (or Loss)

[Michael or Penny Novack]

On 8/26/2025 5:56 PM, Norm Samuelson wrote:

>
> I deposited $60,000 into the CAD account.
     The debit account was the CAD bank account --- what was the credit 
account? It was in what denomination? (if not CAD an exchange rate 
involved as of that date
>
> I transferred $20,000 CAD to the USD account, with an exchange rate of 
> 1CAD to .75USD. resulting in $15,000 USD.
>
> Later I transferred another $20,000 CAD to the USD account, with an 
> exchange rate of 1CAD to .74USD. resulting in $14,800 USD.
>
> That left me with $20,000 CAD and $29,800 USD.
>
> The Balance Sheet shows Unrealized Gains of $200 USD.
      What was the date of the Balance Sheet and exchange rate then. 
What currency is the Balance Sheet in?
>
> I have to assume that the "Unrealized Gain" came because of the change 
> in the exchange rate.  The first transfer gave me $200 more than the 
> second.  So I gained money on the first transfer by doing it at a 
> better exchange rate???  (But I did not "realize" it???)
>
> I wind up with Total Assets of $44,600 (the $29,800USD plus the 
> $20,000CAD which is now worth $14,000 at the new exchange rate).
>
> Retained Earnings is $45,000 (the initial $60,000 at the early 
> exchange rate).
    HUH? You haven't described any transaction involving income or 
expense. Might I suggest you run an income statement, start date when 
you made the initial deposit and end date the date of the Balance Sheet.
>
> Unrealized Gains is $200
>
> Total Equity is $45,200.  I do NOT understand that, as I do not have 
> over $45,000 now, but under $45,000.
>
   Well THAT agrees with "retained gains" + "unrealized gains" (you 
probably didn't describe the initial deposit correctly)

Show us initial transaction when you deposited 60,000 CAD ---- if your 
"real currency" is USD, I would expect a credit to equity in dollars 
converted at the exchange rate as of that date.

Might I humbly suggest that trying to have more than one currency in a 
set of books is beyond somebody new to double entry bookkeeping


Michael D Novack