I have noticed that Manager is not posting, as I would have expected, the resulting exchange rate gains from the following postings:
We got a short term loan in forex (EUR) and paid it back in forex after three months. The exchange of the Euro has gone down and this should have triggered a automatic posting to the Foreign Exchange gains/losses, shouldn’t it?
We also posted exchange rates for the dates of the two postings.
Can you share the exchange rates table screenshots?
I strongly believe you did not correctly capture the transaction. Show the edit screen of the payment transaction.
The foreign exchange gain/loss captures gains or losses when evaluating balance sheet accounts which are held in foreign currencies
What values, if any showed up on your accounts for 5 dec 2021?
What exchange rates did you enter for the dates in between 19/08/21 and 06/12/21, if any?
I think Foreign Exchange also captures other types of transactions too, for example when you pay suppliers in forex.
The Exchange rates used are indicated above.
On the 5th of December 2021 the forex losses were 8.737.706
When you drill down on the forex gains/losses on 5th dec you should see the loan
No, it does not show
So what is your problem?
Please show a report or screen where you think the figures are incorrect
If you got a loan in a foreign currency, then after you got the loan you would have
An asset, Euro account of € 5,000 which would be converted to RWF on your balance sheet
An liability, Euro loan, of € 5,000 which would also be converted into RWF on your balance sheet
Any foreign exchange gain/loss on the asset would be offset by the same gain/loss on the liability
Sorry I meant “it does not show”
Please provide one screenshot with the total overview of all your forex exchange entries. You just showed 2 separate ones but it would be helpful to see all of them in one screenshot. Also show a screenshot of part pof the P&L summary screen where the forex gains/losses would appear.
You also have to show a full record of the Euro/RWF exchage rates
Once foreign currency payables are settled with the same currency as the payables, there will be no exchange gains or losses.
There will be unrealized gains/losses during the life of the liabilities whenever you enter foreign exchange rates, but I believe those gains and losses will be reversed if the liability is settled with the same foreign currency.
FX gains or losses of liabilities appear to inform you of cost/gains should the liability be settled with your base currency.
That’s absolutely on point since there’s no foreign currency balance and no exchange of foreign currency involved.
Without the full Balance Sheet, it is not possible for me to comment further
I would expect to that the asset (the euro account) and the liability (the loan) would offset each other
From what I have seen so far, if I have Payables in forex and I pay these payables in forex, Manager will calculate forex gains/losses automatically (Foreign Exchange Gains/Loses is a control account). And I would assume that this would be the same for any other accounts in forex.
For example, this is how Foreign Exchange Gains/Loses looks like:
If I go in the details of Payables in EUR I find a series of transactions and if I take a random transaction like VacuVin, this account calculates automatically the difference between the value of the forex when the invoice was registered and the value of when it was paid based on the registered forex exchange rates:
I would assume that the same thing would happen for other accounts in forex, even custom accounts like the Temporary loan I have created.
So that we can test what you have done, please show edit screens of ALL of the entities involved in your loan
Accounts you setup incl the bank account, transactions and exchange rates
Although, it seems to be more a misunderstanding of Foreign Exchange Gains/Losses more than anything else
Please explain.
From my perspective, if I use RWF as my base currency, anything that happens in forex (USD, EUR, ZAR in our case) will generate forex gains/losses. If I buy a product in forex on 1/1/2022 and pay it in forex on 1/2/2022, the exchange rate of that currency will change between 1/1/2022 and 1/2/2022, and it will generate a gain or a loss. The same applies to a loan (I “bought” and paid back a loan).
In our case, the RWF 191.286 remaining from the refund of the loan could be paid to the lender (but in reality it is not easy to repay in local currency someone who expects EUR and the lender is fine once he gets back all his EUR they lent). This amount is just a liability, it does not trigger extra profit or extra losses. On the other hand, if these 191.286 are treated as forex gains (and I think they should because I gained 191.286 because of the RWF I saved once repaying the loan) they trigger etra profits and hence extra taxes at the end of the year.
Fx gains on the revaluation of Dollar in Bank account GH¢ 2000
Fx Loss on revaluation of Payable to Supplier -GH¢1000
Net Exchange rate Gain GH¢ 1000
Exchange gain is shown but it is only for the revaluation of the dollars in the bank account and not for the purchase transaction because it has been settled with the same foreign currency.
Kind of hard to explain this table but the net amount of GH¢ 1000 is related to the bank account revaluation. We wouldn’t have seen the GH¢ 1000 for account payable (under current balance) if we paid with the GH¢ equivalent.
Revalued the foreign currency with 1$ = 1 GH¢ on 30/03/2022, Gains and losses disappeared. Because now the Cash in the bank account does not have exchange gain or loss.
If we started the business with just USD 1000, there wouldn’t be any FX gain or loss throughout the period.
This is what I know.
