Foreign exchange gains and losses without payment via bank

SafronS · ‎August 16, 2023

Hi, I would appreciate some advice on an accounting issue we have with our US$ company.

We received intercompany invoices in Euros from our EU Parent company in the year 2020 and booked them at the fx rate to US$ at that point in time.

The invoices are still unpaid today and we have recorded unrealized gains/losses at year end 2022.

Our EU parent company has now signed a loan agreement with us, in Euros, to the value of those open items. The loan agreement specifies, that this is specifically for the purpose of clearing those open Euro invoice. No cash has been disbursed with this loan and we need to record an intercompany loan in the balance sheet.

Question: How can I clear those old Euro invoices against a loan account AND at the same time record a realised fx gain/ loss? When I try to make a vendor payment, Quickbooks is looking for a bank account. I have tried creating "transit" accounts under Current Assets but this also does not work. And if I try to book via a journal entry, I have a currency clash on the document. Many thanks! SafronS.

Ndesa1904 · ‎December 12, 2023

Hi there

How do I record the exchange rate gain or loss by using the last exchange rate in my financial year of income that will affect all the transactions that were recorded through out the year?

JamesAndrewM · ‎December 12, 2023

I appreciate your comment about recording the exchange rate gain or loss using the last exchange rate of your financial year, which could impact all transactions recorded throughout the year. I'm here to share some insights that may assist you in achieving your objective.

Gains or losses in exchange rates are realized on the completion of transactions when money is received or paid. QuickBooks Online displays the impact of a Home currency adjustment on Accounts Payable or Accounts Receivable as an unrealized gain or loss. Similarly, the effect on account types like bank accounts will show a realized foreign exchange gain or loss. The general ledger or the trial balance does not reflect unrealized gains or losses.

You'll want to revalue currency if you use the rate from your last exchange rate in your financial year. Follow these steps:

Go to Settings ⚙, then select Currencies.
Find the currency you want to adjust.
Under the Actions column, select the small arrow ▼ icon.
Click Revalue Currency.
Pick a date (today or a day in the past) to run a currency revaluation.
Select whether you'd like the revaluation to be based on the market exchange rate or a rate you specify.
Choose the account(s) you want to apply the revaluation to.
Pick Revalue.

For detailed information, refer to this article: Enter home currency adjustments for your foreign balances.

I'm adding these articles you can use in your future tasks in QuickBooks Online:

By following these steps, you can effectively record and track exchange rate gains or losses that impact your transactions in QuickBooks Online. If you have further questions about exchange rates, post them here, and I'll answer them ASAP! Have a good one!

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Foreign exchange gains and losses without payment via bank

Foreign exchange gains and losses without payment via bank

Foreign exchange gains and losses without payment via bank

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