I cannot find any specific recent guide or post about how to read the figures that Manager automatically generates in the P/L under forex gain/loss. Any suggestion?
The foreign exchange gain/loss is calculated using the exchange rate on the report date to convert the foreign currency balance owing or owed to the base currency and compare this to the balance calculated by converting each transaction from the foreign currency to the base currency using the exchange rate at the transaction date.
If you drill down on the gain/loss this is shown
Some transactions that are split may show a small gain/loss if the totals of the split values do not add up to the converted total
By “report date” do you mean the ending date in the P/L?
When I click on the amount from the P/L I get this:
Already there I do not really understand why there are those very small amounts.
When I click on the figure at the top I get this:
If I click for example on the Euro figure I get what I believe is the amount owed in Euro to suppliers at the end of the period (in this case 31 Dec. 2020). The exchage rate is the one used for the same date. But then… I am lost with the other three columns.
In the past it was possible to see the details for each amount of gain/loss and it was somehow possible to understand the rationale behind it. Here it seems there is no possibility to see the details. The amount of gain/loss is just given, and it can create problems when you have to explain to local revenue authorities how you come up with those figures.
To get an explanation of the small amounts you need to show the details of one of the invoices and the exchange rate used on that date
Here’s an example from my business
The exchange used on the date of the posting is € 1 = $ 1.1933
My invoice has 2 lines and the exchange rate on the day it is posted is Eur/Usd 1.1933
It is probably more correct to call this a rounding error , but as it is not a material amount, and if you have multiple invoices, some differences will be positive, some will be negative posting the differences to FX Gains/Loss is acceptable.
For the others it is the difference between the amounts posted to the accounts payables in your base currency using the exchanges rates on the day of the posting and the value of the accounts payable in the foreign currency converted using the exchange rate of the date of the report
Thank you for the time you are taking to explain all this.
I understand the principle behind forex gains/losses (exchange rate on the date of purchase posting vs. the exchange rate on the date of the payment for the purchase and/or on the date of the report).
My concern is though to be able to provide an explanation for the total gain/losses to the local revenue authority in case they come here and challenge the amount of gain/losses. With this system you get a total based on all the transactions in a specific currency, but they might want a clear picture of gain/losses for each transaction, which was possible in the past with Manager.
@mauroskov, if I understand your concern correctly, you can get what you want by drilling down on the Foreign exchange gains (losses) account balance on the Summary page. You will see a list of all transactions contributing to that balance. That should be satisfactory for an auditor.