"Negative gain" in Adjust Exchange Rates

Miklos_Hollender

Sometimes we get weird monthly totals on exchange rate adjustments, for example, "negative gains" or "positive losses".

My hypothesis: if you had a gain in the previous month, and now a loss, then it is "netted", the gain is written back to 0 and only the difference is in the loss.

E.g.

Month 1: €100 gain on one invoice:

Gain: €100
Loss €0

Month 2:
€120 loss compared to the previous month, or €20 loss compared to the original invoice

Gain: -€100
Loss: €20

So you have a weird case of a negative gain.

Questions:

1) Is it true?
2) Does it make sense to accountants? It kind of makes sense to me.
3) Basically you always have to add up your unrealized gains and losses accounts in your monthly or yearly Profit and Loss Account / Income Statement because alone they make no sense? I.e. they can show gains on the loss account or the other way around.

jglathe

Hi Miklos,

1) yes.
2) don't know, I'm no accountant. But there is a reason inside the adjustment logic. It tries to "eat up" previous unrealized amounts first before recording the swing into the other direction. Which makes sense considering that unrealized gains/losses are an balance accounts.
3) unrealized gains/losses should be on balance accounts, they're only a valuation which gets cancelled out when the entry is applied. But it doesn't count as real gain/loss, so no income statement accounts.

with best regards

Jens