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dellis2024
Level 1

Exchange Gain

We operate is USD and CAD but do not have a posted exchange rate,$1.00 is $1.00 whether in CAD or USD in QBO until we exchange the funds and are recording as a journal entry. 

 

Example: 

 

We exchanged $100,000.00 USD from our US account and then deposited $134,000.00 into our CAD account. 

The Journal entry we used is as follows: 

 

Credit USD Bank account $100,000.00

Debit CAD Bank account $134,000.00 

Credit Exchange Gain / Loss $34,00.00 

 

This is showing as a negative on my P & L, but the $34,000.00 is a gain and not a negative. Should my journal entry be different? 

 

 

3 Comments 3
JamesM4
QuickBooks Team

Exchange Gain

Hi there, 

 

Thanks for reaching out to us here. QuickBooks is a powerful program that helps you to manage your accounting with ease. I'll be glad to share more info so you're on the right track with your work. 

 

Recording your journal entries the right way is essential for ensuring your books remain accurate. That said, I recommend consulting an accounting specialist for expert advice. This ensures your entries are recorded in a way that allows for you to navigate the program with peace of mind. You can get in touch with an accounting professional using this link here. Other accounting professionals are able to see this post in the Community and this will allow them to chime in. In the meantime, here's a helpful article that shows you how to: Create journal entries in QuickBooks Online.

 

Let me know if this info helps. I'm here to steer you in the right direction.

Accracy Accounting
Level 4

Exchange Gain

Ideally you should enable multi-currency for you QBO (USD and CAD)

The 34,000 is not your exchange gain/loss

 

To break it down (I will assume you reporting currency is CAD)

On Jan 1, 2024 -

Exchange Rate = 1.31

USD Bank = 100,000 USD

CAD Bank = 0 CAD

Total Bank Amount=100000*1.31=131,000 CAD

 

On Jan 10, 2024 - You decide to transfer 100,000 USD to CAD

Exchange Rate = 1.34

USD Bank = 0 USD

CAD Bank = 134,000 CAD

Total Bank Amount=134,000 CAD

Exchange Gain/(loss) = 134,000 - 131,000 = 3,000 CAD

 

If you have multi-currency option enabled, then this exchange gain/loss will be taken care of automatically by QBO and reported under Exchange gain/(loss). 

I hope that helps.

LeithG
Level 7

Exchange Gain

Hi Dellis

The gain/loss shows as negative because below-the-line it assumes it will be an expense; if you're making a gain, that's the negative of an expense.  If you look at your net income after the gain/loss I bet you'll see it's higher because of the negative value of the exchange difference.

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