Exactly, the issue is when the loan is repaid. Right? Which was my starting point.
I provided you with information that would help you answer your original question, i.e. the post you put when creating this topic. You observer that Manager was not posting gains/losses you expected and I tried to explain that it works correctly but you need to understand the difference between realised and unrealized forex gains and losses. @Abeiku gave a lot of related replies as you first need to indicate what it actually is what you do not see. He even went so far to advise special accounts as it is much easier to see what happens to forex loans.
@Joe91 I looked at your questions and similarly you first need to indicate if realized or not. Once that is sorted it would be possible to assess if Manager is doing it wrong, but from my experience it is doing it correct, i.e. focuses on realised loss/gains because that is what matters to tax authorities and goes beyond the individual transactions and the perceived gains/losses on invoices.
@eko I understand the difference between realised and unrealised Forex gain/loss. In this case, I believe, it is a realised gain because the loan I am talking about was repaid, so there was an actual surplus in the value expressed in the base currency. If the loan was repaid the following year and I had to define the value of that liability at the end of the year by posting an exchange rate on the last day of the year, that would be an unrealised Forex gain/loss. Therefore, being a realised Forex gain (this is what my auditor said) I would expect that to gain to go straight into Forex gain/loss.
Anyway, I will probably follow @Joe91 lead and create an ad-hoc Forex gain/loss account where to post this kind of transactions.
1 Like
Maybe create a test business and do the following:
- Enable the usual bank and cash accounts, receipts, payments, customers, suppliers, and also Special Accounts.
- Set your base currency in settings to RWF and create Euro as a foreign currency and enter an exchange rate (you did this before)
- Create a Control account called Euro Loans under Special Accounts in Settings
- Create a Loans in Euro special account from the Tab Special Accounts (left screen).
- Create a receipt in your local bank (as the Euro would have been converted to RWF) and slect under account âEuro loansâ, it will then prompt to select the Special Account and then you can enter both the Amount in RWF and the currency amount in Euro.
You have to follow similar for payments, (i.e. repayment of the loan). You will see that the losses/gains will probably show as you expected.
Thanks, I will try this. I just think Manager should make things easier and when there are transactions in forex it should be able to post forex gains/losses automatically. But maybe my expertise in accounting and Manager is not good enough to fully understand and manage this topic.
I am confused, it does automatically post forex gains/losses in the P&L.
OK now I am very confused! My initial post was about Manager not posting the gain to forex gains/losses generated by the repayment of a loan received in forex and repaid in the same forex. And there has been a discussion about several things, such as realised/unrealised forex gains/losses, special accounts, etc. To be honest I stick to my initial idea that any transaction in forex whether payables, purchases, loans, should all automatically generate forex gains/losses in the P&L, but it seems not to happen for loans.
Mauraskov is correct. If they transactions are purely financial, no Forex gain/loss is posted
Try this
Create base currency bank account
Create foreign currency bank account
Create loan liability account (in base currency)
Day 1
Set exchange rate
Receive a loan in a foreign currency to a foreign currency bank account and credit the loan liability account
Transfer it from foreign currency bank account to base currency bank account
Day 2
Set a different exchange rate
Transfer the money back from base currency bank account to the foreign currency bank account (matching the original foreign currency amount)
Make a payment from foreign currency bank account of original received amount of foreign currency and debit to loan liability account
You have realised a Forex gain or loss but this does not show up in Manager at all
Sorry @Joe91 you can not expect this when using a foreign currency bank account to pay and repay a loan in that currency as there would be no exchange rate applicable.
The example you gave where you transfer from one currency to the base currency in Manager would require to enable inter-account transfers and then it would record the forex gains/losses as expected.
@mauroskov My earlier posts answered your question. But do what works for you.
1 Like