[GNC] Multiple currencies involved - how to correctly deal with it?

[Boniforti Flavio]

Hi Richard and thanks for replying.
I do already have a "Income:Music Equipment Sales CHF" account, but perhaps
I don't think it's correct to add a "decrease" in that account of CHF 32.-
(which is the loss I suffered). Probably it's a matter of perspective... I
could create a separate "Expenses:Music Equipment Sales Loss CHF" and put
that amount in there? But in the latter case, it would be a positive
number, whereas I think it really is a negative number (loss) - and
therefore it would still be the best thing to put it in the "Income:Music
Equipment Sales CHF" as a negative entry?!

TIA,
F.

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Am Mo., 16. Juni 2025 um 19:23 Uhr schrieb R Losey <rlosey at gmail.com>:

>
>
> On Mon, Jun 16, 2025 at 6:00 AM Boniforti Flavio <boniforti.f at gmail.com>
> wrote:
>
>> Hi all.
>>
>> I've got a collection of (vintage) music instruments - I have an account
>> for each item, where I put the money I've spent to buy such items. Each
>> item is a sub-account of a super-account "Instrument collection" - and I
>> got 2 of them: one in CHF and the other in EUR.
>> I've also got different bank accounts for CHF and EUR of course.
>>
>> Let's pick this example, where I'm struggling to put the numbers in the
>> correct accounts:
>> - Item ABC, sub-account of the CHF "instrument collection", bought for CHF
>> 79.- (which I've entered as "opening balance");
>> - selling this item in EUR, therefore I've received money to increase my
>> EUR checking account;
>> - no shipping costs involved this time (the intermediary took 57 Euros
>> from
>> the buyer and sent me 50 Euros, the other 7 Euros were already used by the
>> intermediary to buy and send me a shipping label).
>>
>> Now the question is: how should I correctly enter all the different
>> transactions? My approach would've been:
>> - increase my EUR checking account of 50 Euros - the corresponding account
>> would be "item ABC";
>> - at this point the account "item ABC" still shows a positive value -
>> which
>> cannot be true as I've sold it, so it's not anymore in my possession. How
>> do I register this loss?
>>
>
> I remember your post from last year; I'm only going to attempt an answer
> to the first case in this email.
>
> I assume that item ABC, purchased in CHF is listed in CHF. When you sold
> it, presumably it lowered the item ABC balance. However, because you sold
> in EUR, how did you mark that in item ABC? Did you convert EUR to CHF for
> the date of the sale, and then use that number?
>
> (Assuming that you converted EUR to CHF), you'll want to move the
> remaining balance to either an Income account called something like
> "Instrument Gain" or an Expense account called "Instrument Loss".
> Personally, I favor the Income account, os I would think that it would be
> more usual to sell the instruments for gain. Of course, you could have one
> of each and put the gains in one and the losses in another. (If I were
> doing it, I'd have a single Income account; however, you might need one in
> CHF and one in EUR, if instruments have been purchased under both
> currencies).
>
> So, using your numbers above (and looking up current exchange rates and
> simplifying for example), I'd enter
>
>       Increase EUR checking by 50 EUR
>       Decrease Item ABC by 47 CHF [about what 50 EUR is - you should use
> the real value; I'm using this for the example]
>       Decrease item ABC by 32 CHF [the remaining value]
>       Record a loss (decrease, I Think) in the Income account "Instrument
> Gain" by 32 CHF
>
> That should leave you with zero value for item ABC (which you could now
> "hide" the account so you don't see it).
>
> Note that you could merely enter ONE entry into item ABC, decreasing by 79
> (the total value), but I did the above in two entries to (hopefully) make
> it clearer.
>
> I seem to remember from your earlier post that you are not concerned with
> tax consequences of the sale, so I that didn't influence my thinking.
>
> I hope this helps you.
>
>
> --
> _________________________________
> Richard Losey
> rlosey at gmail.com
> Micah 6:8
>