Forum Discussion

McCarthy1's avatar
McCarthy1
Experienced User
6 years ago

Multicurrency conversion

I am in New Zealand and have a Foreign Currency bank account (Australian) In the ledger the balances appear in NZ Dollars, which is fine. When I input all the transactions, converting to NZ Dollars...
  • Mike_James's avatar
    Mike_James
    6 years ago

    Hi McCarthy1 , the $4844.76 represents an unrealised gain, which you can journal to your MYOB account, resulting in a closing balance of $362,871.16. This is also the AUD balance of $344,727.60 div by .95. I would normally take the AUD and work out what it is worth in NZD then compare to the ledger.

     

    The journal will debit the AUD bank account and credit your currency variance account in the P&L.

McCarthy1's avatar
McCarthy1
Experienced User

Thanks for that but mine is a bit more complicated.

I use .95 are the default rate but when the money is transfered from AUD acc to NZD account I put in the actual conversion rate

I have attached a spreadsheet to try and explain myself.

The 1st 2 columns are the ledger account for the Forex acc

The next 2 are the actual bank statement figures

The 3rd 2 columns are the actual Foreign exchange income when transfered to the NZ bank account. So you can see the rate varies from .95 to 0.97.

So my ledger balance is NZ$358,026.40

My bank balance is AU$344,727.60

To know that my ledger account is correct and agrees with my bank account I would expect the $NZ358,026.40*.95 = $340,125.08

But

The bank balance is $344,727.60 converted to NZ$ would be $362,871.16

There is a difference of roughly $4,844.76

I have reconciled the bank account so I know it is correct.

Should I transfer that difference to a Foreign Exchange income or ex[pense account each month so I know the bank ledger account is correct?

Should I transfer the difference

Mike_James's avatar
Mike_James
Ultimate Cover User
6 years ago

Hi McCarthy1 , the $4844.76 represents an unrealised gain, which you can journal to your MYOB account, resulting in a closing balance of $362,871.16. This is also the AUD balance of $344,727.60 div by .95. I would normally take the AUD and work out what it is worth in NZD then compare to the ledger.

 

The journal will debit the AUD bank account and credit your currency variance account in the P&L.

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