> On Feb 13, 2025, at 01:19, Bo Buckley <topherbuck...@gmail.com> wrote: > > In the foreign currency docs: > https://gnucash.org/docs/v5/C/gnucash-guide/currency_trading_accts.html > > The Trading and CURRENCY placeholder accounts now indicate a modest >> realized loss of 0.82 USD on the currency transactions. > > > it appears to explain that the Trading top-most account balance represents > a loss if positive or a gain if negative. I only have a single transaction > so far that involves converting USD to JPY for a transfer. See attached for > the transaction. The Trading account already shows a balance of 247.38 USD. > How does this make sense? I didn't lose money on the transfer (other than > the fee). It appears this balance is calculated based on the most recent > Price Database entry for the currency (i.e. JPY at 0.0066 for 02/09/2025). : > 4,964.32 - (714,688* 0.0066) = 247.38. > > It seems to be interpreting a currency exchange from 1/9/2024 as a loss > even though at the time of the trade it was not a loss. How am I to > interpret this and what is this Trading Balance used for elsewhere? I don't > want it unintentionally affecting some other report calculations. > > For the sake of clarification, lets compare this behavior to stock trading. > USD and JPY are two commodities, just like USD and GOOG. For my example > transfer from USD to JPY, the Trading Account balance loss seems to be > similar to an unrealized loss if I interpret the transfer transaction as > buying JPY from USD with the intent to someday convert back to USD. This is > similar to buying GOOG from USD and if GOOG dropped in values since buying. > But why is it not interpreted the opposite way, i.e. I sold USD to get back > JPY (or I sold GOOG to get back JPY for the stock analogy)? I want to make > sure GNUcash is not unknowingly treating the correct transactions as > taxable events and not the opposite. I.e. for Japanese tax reporting the > transfer would represent a taxable event as I "sold USD". The opposite > would be true for US tax reporting no? I want to make sure I understand the > implications of this balance.
Bo, The Accounts page Total column does use the most recent price database entry to value each commodity that isn’t the book currency and that will make the trading accounts reflect an unrealized gain or loss. US GAAP and IAS require all foreign currency transactions to be valued at the time of the transaction in the book currency, and doing so inevitably creates trading gains an losses that must be accounted for to keep the books in balance. If the net gains aren’t taxable then you can book them to a separate non-taxable income account. Keep in mind that GnuCash has no way of helping you catch mistakes where you book a capital gain or loss to the wrong income ro expense account: It can only verify that the accounting equation balances for the whole book. GnuCash also can’t automatically handle multiple trading accounts per commodity. If you need that you’ll have to turn off trading accounts in File>Properties and manage the trading accounts and splits manually. Regards, John Ralls _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
