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m-hui
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

I am using QB Pro 2014 multi currency version. Home currency is HKD. 

I have a JPY S/A bank account.

The year beginning balance + the year total deposit - the year total withdrawal = The year-end closing balance (a positive figure) = bank statement. But the Home currency value for The Year beginning balance + the year total deposit - the year total withdrawal = The year-end closing balance = a negative figure.

I cannot figure out why the foreign balance is a positive figure but the home currency value is a negative figure.  I did not do the year-end adjustment for JPY to home currency value at the last year-end and this year-end yet.  Is this the possible reason to have this result ?

How and what can I do to correct it?  Can I adjust the last year-end home currency value after the ending of the last year?  Thank you very much for your help!

Solved
Best answer December 10, 2018

Best Answers
Safari818
Level 3

How to correct the home currency value for foreign bank account closing balance? Thank you.

The apparent discrepancy is the result of changes in the exchange rate during the year, and transactions that are not recorded at the actual exchange rate at the time of the transaction.  Failing to enter the home-currency adjustment at year-end is one contributing factor.  Note that this apparent discrepancy is just a result of doing business in multiple currencies at fluctuating exchange rates - it is a natural consequence, it is not an error.  The year-end home-currency adjustment records the result of the differing exchange rates - a gain or loss.

At a minimum, a home-currency adjustment should be recorded at every year-end.  Failure to do this may result in misleading financial and tax reports, and errors in tax payments.  For some businesses it may be desirable to record a home-currency adjustment more often - quarterly, monthly, immediately following an unusually large transaction, or on some other criteria unique to your business.  

You should discuss this with your own professional accountant to help determine the best course of action with respect to the previous year-end currency adjustment, the current year-end adjustment, and the most appropriate timing of adjustments between year-ends.

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15 Comments 15
JianCarlo_S
Moderator

How to correct the home currency value for foreign bank account closing balance? Thank you.

Hi @m.hui,

Let's see if our AllStars @Safari818 and @qbteachmt might be able to help with this. They've been extremely helpful before with questions about home and foreign currencies.

Safari818
Level 3

How to correct the home currency value for foreign bank account closing balance? Thank you.

The apparent discrepancy is the result of changes in the exchange rate during the year, and transactions that are not recorded at the actual exchange rate at the time of the transaction.  Failing to enter the home-currency adjustment at year-end is one contributing factor.  Note that this apparent discrepancy is just a result of doing business in multiple currencies at fluctuating exchange rates - it is a natural consequence, it is not an error.  The year-end home-currency adjustment records the result of the differing exchange rates - a gain or loss.

At a minimum, a home-currency adjustment should be recorded at every year-end.  Failure to do this may result in misleading financial and tax reports, and errors in tax payments.  For some businesses it may be desirable to record a home-currency adjustment more often - quarterly, monthly, immediately following an unusually large transaction, or on some other criteria unique to your business.  

You should discuss this with your own professional accountant to help determine the best course of action with respect to the previous year-end currency adjustment, the current year-end adjustment, and the most appropriate timing of adjustments between year-ends.

m-hui
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

Thank you for your advice.  What is the steps I need to do if I want to adust the last year end home currency value and this year home currecny value?  Thank you.
Safari818
Level 3

How to correct the home currency value for foreign bank account closing balance? Thank you.

My personal method is as follows:
Display the balance sheet and note the home-currency value as it is now. Calculate the correct home-currency value according to the appropriate exchange rate, and the difference from the balance sheet.  Make a home-currency general journal entry to the bank and the Foreign Exchange Gain/Loss account.  Do this first for the previous year end, then for the current year-end.

As I noted previously I recommend that you discuss this with your own professional accountant to ensure the entry for the previous year-end does not result in discrepancies with previously published reports and previous tax returns.
m-hui
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

Thank you very much for your valuable method and advice.  I will try first.  Thank you for your kind support.
Safari818
Level 3

How to correct the home currency value for foreign bank account closing balance? Thank you.

You're welcome.
bugs1
Level 2

How to correct the home currency value for foreign bank account closing balance? Thank you.

Just to add a little to Safari's suggestion.  
My home currency is HKD but I have Amazon accounts in CAD, EUR, GBP and USD.  I can reconcile the year end holdings in each foreign currency by getting the statement from Amazon, however, the balance sheet at year end in HKD shows a variance and needs to be adjusted to reflect the exchange gain/loss from Amazon.

When I initially tried to make a journal entry that only affected the home currency I couldn't because by virtue of selecting the bank this also meant that any entry affected the CAD balance (reconciled, no need to adjust) AND the HKD valuation.  

A quick call to QBO provided a neat hack which is to create the journal entry in your home currency, select the foreign currency bank but assign the currency exchange rate to 999999 (on this transaction only!) which will have the effect of debiting (or crediting) to the exchange gain / loss account the amount in HKD but not affecting the bank balance in the foreign currency since it would take 999999 movement in HKD to adjust the CAD value by 1.

Bugs..
Katerina
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

Very inconvenient. Why not to fix this making the balance calculation not by the tranactions summarizing, but by current date exchange rate?
Golden_
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

Should the year end currency conversion adjustment be reversed at the beginning of the next fiscal year?
Safari818
Level 3

How to correct the home currency value for foreign bank account closing balance? Thank you.

Optional.  I usually don't bother.
BryanSK
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

In Quickbooks Desktop go to MENU > Company > Manage Currency > Home Currency Adjustment. 
Select DATE and CURRENCY. Click on CALCULATE ADJUSTMENT. If relevant transactions are on record table will come up with accounts to adjust.
Check affected account and SAVE. See your new account balance. 

 

Note: You will get empty output on table if foreign currency account balance (not USD balance on foreign account)  is zero at selected date. In such case just change date according to some non-zero balance.

Peter EA
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

I get this on quickbooks online. There are no intercurrency exchanges, as we are entering all transactions in COP, but just want to see reports in USD. When there is a positive balance in a COP account, quickbooks online will show it as a negative balance on the balance sheet. Again, there are no USD transactions, the reports are just in USD.

Jen_D
Moderator

How to correct the home currency value for foreign bank account closing balance? Thank you.

Thanks for joining the discussion, Peter,

 

Allow me to join the discussion and share some insights about this topic.

 

If the Multicurrency feature is turned on in QuickBooks Online, the system uses your home currency on reports to show the actual cashflow of the company. The amounts are multiplied with the current foreign exchange rate to help businesses review their financials during the Fiscal Year.

 

You can check the settings and verify if USD is set as the home currency and not Colombian Peso. You can go that, by following the steps below:

 

  1. Click the Gear icon then choose Accounts and Settings.
  2. Tap the Advanced menu and scroll-down to find Currency.
  3. If United States Dollar is set as Home Currency, then this is the reason why your Balance sheet is showing USD.

 

Also, to find the discrepancy on the balance sheet, click the negative amount and review the transactions under it. You can also share a screenshot of it here in the community so we can help identify any discrepancies.

 

Tag me if you have other questions or concerns about QuickBooks Online Multicurrency. I'll be more than happy to help. All the best!

Peter EA
Level 1

How to correct the home currency value for foreign bank account closing balance? Thank you.

The Balance Sheet shows - $645 USD (negative balance), while the register shows 53,192.89 COP (positive balance). Looking at the register it is unclear why this difference would exist between the reporting and the register.

DebSheenD
QuickBooks Team

How to correct the home currency value for foreign bank account closing balance? Thank you.

Hello there, Peter EA.
 

A negative amount in the balance sheet will appear if the company pays more than the amount of its liability. I'll make sure you can fix this.

Here's how:

  1. Go to Reports.
  2.  Select Vendors and Payables. In addition, you have to select an unpaid bills detail report.
  3. Scan the report and check on the negative. 
  4. Double click on the negative amount, to open the bill payment check. Check the bill at the bottom part of the screen.
  5.  Put a checkmark next to it and enter the correct amount.
  6. Hit Save and Close
  7.  Click Yes when QuickBooks will ask you about saving the transaction you entered.


To verify if the negative amount is gone, you may open the Unpaid Bills Detail Report and click on refresh.

 

I'm adding this article for additional information about customizing a report: Customize reports in QuickBooks Desktop.

 

Let me know if you have questions about the bank account balance. I'm always here to help.
 

    

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