How is the exchange gain or loss recognized by QB

Dear gandhiapaq,

Good day ! i'm here to help :)

The exchange gain or loss in QB is recognised via the exchange rate field in the vendor invoice. For example, when we record the vendor invoice at a rate of 1:1.5 and subsequently, we record the payment at 1:2.0, there will be an exchange gain or loss based on the vendor invoice value X the difference in exchange rate (0.5 difference here).

We can avoid the exchange gain or loss by making sure the exchange rate is the same for the invoice and payment. To do this, we open the payment transactions, and edit the exchange rate to be the same as the vendor invoice exchange rate. The exchange gain or loss will be cancelled/removed.

Thanks

Is there a way to assign a class to the exchange difference?

Thanks for joining this conversation, @dtherrien.

I'm here to help get this taken care of, but I have some questions about your concern first.

To ensure that I'm on the same page, may I know where you want to assign a class? Is it for a specific transaction? Any additional information will be much appreciated. This will help me make sure that I can provide you with the best information.

In the meantime, I'm including these articles for additional information:

• How to set up and use class and location tracking.
• About Multi-currency.

I'm looking forward to your response, @dtherrien. Take care always.

Hello.

I also would like to know how to assign a class to the account "Exchange Gain Or Loss"

You asked "Where", well I would like to assign a class every time, but at this moment the most important is at the time of the payment, I mean, when the account appear in a cash movement (I am only using multi-currency in sales)  because we use Cash Accounting Method. But it could be necessary also at the time of the invoice.

Thanks for your help.

Hey there, qbo2.

Allow me to provide additional information regarding adding a class to the Exchange Gain Or Loss account in QuickBooks Online.

Adding a class to the Exchange Gain Or Loss account is currently unavailable in QuickBooks Online. The Exchange Gain Or Loss is calculated once the payment is applied. You can only assign a class in the invoice and not at the time of payment.

These articles are a good reference:

• Frequently Asked Questions about Home Currency Adjustments.
• Change the accounting method.
• Differentiate Cash and Accrual basis.
• How to set up and use class and location tracking.

For additional help, you can also reach out to our QuickBooks Online Support.  

1. Sign in to your QuickBooks Online Company.
2. Click (?) Help at the upper right corner.
3. Select Contact US on the pop-up.
4. Enter a brief description of your concern then hit Continue.
5. Click Get a callback.
6. Enter your contact information.
7. Select Call me.

Feel free to get back to me if you have additional questions about Exchange Gain Or Loss in QuickBooks Online. Have a good one.

Has adding a class to the Exchange Gain Or Loss account in QuickBooks Online been added?

Thanks for joining the thread, @a-smith.

I'll share some information about adding a class to the exchange gain or loss account. Exchange gain and loss in QBO are calculated automatically and separately from the source transaction. Thus, adding it isn't possible.

To learn more about this feature, see the following links below:

• Frequently Asked Questions about Home Currency Adjustments.
• About Multi-currency.

If you have other questions or concerns about your exchange gain or loss account, please let me know. I'm more than willing to answer them for you. Have a great rest of the week.

That was a long post to simply say no. 

Are there any plans to change/update this?

Glad to have you back, @a-smith.

Currently, we don't have any update if this feature will be added soon. You can visit out blog site to stay current on the latest product updates. This way, you'll know what's new in QuickBooks Online.

Here's the link to our site: The QuickBooks Blog 

Feel free to message me anytime if you need help with anything else. I'll be around for you. Take care.

I used a JE to move the exchange gain/loss from the unspecified class to the class where I wanted it to appear:

For a gain:

Debit unspecified (leave class blank)

Credit class where you want the gain to appear

For a loss

Debit class where you want the gain to appear

Credit unspecified (leave class blank)

Hi, I'd like to know if adding a class to Exchange Gain/Loss account is available in QB desktop.

Thank you

Hi there, Anonymous2021.

I'm here to share some insights about attaching class to the exchange gain or loss account.

Currently, we're unable to add a class to these accounts since the amounts are calculated separately from the source transaction. As a workaround, you can follow the steps provided by O2Nicole to move the exchange gain/loss to your desired class using a journal entry.

I also understand how important this option to your business, especially if you have a lot of segments you want to keep a close eye on. Rest assured, I'll take note of your ideas and suggestions to help improve your experience in QuickBooks.

I'm also adding these articles to help manage your classes in the program:

• Set up and use class tracking
• Filter, sort, or total reports by Class

If I can be of any additional assistance, please don't hesitate to reach out to me again. Stay safe and have a great rest of the day.

What if the payment wasn't through QB? After the exchange, the amount received is $31 less than invoices. I think I have to record a write off, but how?

I can share the steps in handling the currency exchange difference, CCR1.

You can write it off as bad debt in QuickBooks Desktop. This way, you'll be able to close the invoice. First, you'll have to add an expense account to track the bad debt. I'll show you how:

1. Go to the Lists menu.
2. Choose Chart of Accounts.
3. Click the Account drop-down menu, then hit New.
4. Select Expense, then Continue.
5. Enter "bad Debt" in the Account Name field.
6. Click Save and Close.

When you're ready, here's how to close out the open invoice:

1. Go to the Customers menu.
2. Choose Receive Payments.
3. Enter the name of the customer in the Received from field.
4. For the payment amount, enter $0.00.
5. Select Discounts and credits.
6. In the Amount of Discount field, enter the amount you'd like to write off.
7. For the discount account, select the bad debt account you've created earlier.
8. Click Save and Close.

I also recommend checking our Accounts Receivable Workflow Guide to learn more about the different ways of tracking customer transactions.

We're open here 24/7, so please don't hesitate tp visit us again if you have any other concerns or questions. Have a good one.

Why would that be classified as a bad debt?

Thanks for joining this thread, JMG6.

In QuickBooks Desktop (QBDT), when the invoice you send is uncollectible you have to record it as bad debt to write them off. This process ensures that your accounts receivable and net income stay up to date. To know more information about this, feel free to visit this article: Write off bad debt in QuickBooks Desktop. 

Also, in QBDT, monitoring your business income and accounts receivable is a breeze. The program has ready-made customer reports you can open at any time and customize depending on your business needs. 

Don't hesitate to post again here if you have any other QuickBooks concerns. I'm always around to assist you. Take care.

Hello, I have the same problem. were you able to sort it out and how?

Thanks very much

Gigi

Good day, @gigiblewis.

Before we proceed, I'll have to ask for more information to understand the situation. Additional insight on this matter is greatly appreciated.

Our Community Help Articles page contains resources, video tutorials, and tips to manage your company files. If you need more information, feel free to visit the site.

I'll be here to help if you need further assistance. You can notify me by clicking the REPLY button below. Have a great day and keep safe!

I do not have the option of altering the exchange rate on either the in or out bound transfer because they are transfers between a foreign and home bank accounts that are both mine.  If I do not use the actual exchange rate that occurred for each transfer one bank account or the other will not reconcile.  In reality, you do make or loose money after an series of exchanges in and out of a currency. (There are many people who exchange in and out of foreign currencies for that purpose.)  What you need is a transaction that takes the balance in the home currency and moves it to an income or expense, but is not a transaction in the foreign currency.  Is there anyway to do that?  

In my case the foreign bank account is closed and reconciled to zero.  But the balance sheet in dollars shows a permanent balance for that account.     

Thanks for following this thread, Sandy.

I'm here to help you handle the balance sheet balance by providing solutions to zero out the balance.

The variations in exchange rates are a natural consequence of engaging in transactions involving different currencies. 

You can zero out the balance on your balance sheet by creating a journal entry. Before doing so, I'd suggest consulting with an accounting professional who can provide specific guidance tailored to your unique situation. 

For additional details on adding, editing, or reversing a journal entry, please refer to this resource for further guidance: Create a journal entry in QuickBooks Desktop for Windows or Mac.

Moreover, use this guide anytime you need help reconciling or fixing a reconciliation: Learn the reconcile workflow in QuickBooks.

Please feel free to ask any additional questions you may have, and we're here to assist.

Thanks for the reply.  The situation I am in Is I can EITHER zero out the foreign bank account OR the balance sheet.  If I use a journal entry to zero out the balance sheet entry then the foreign bank account is out of balance.  I do not know of a transaction that can satisfy both.   
I do realize that the "natural consequence of engaging in transactions involving different currencies. " In fact it does represent an actual gain or income for the scenario where the amount of the balance sheet is positive.