How do you realise a Foreign Currency (FX) Gain or Loss? Non-zero balance warning

In some cases, when trying to mark as inactive a FX account with an apparent zero balance in the foreign currency, a warning message will appear.

The following warning message will be displayed:

Warning: This account has a non-zero balance. You cannot mark it as inactive.

This is because the corresponding AUD values in the account do not show a zero balance due to how the calculations are performed against the exchange rate that has been entered at a given point in time, this results in a Gain/Loss situation. 

Note: If you open the account register and toggle the view between HC and FX you will see the amount you will need to journal.

Note: If you have transitioned from a different job type, the FX gain/loss may exist ina previous job type.

Here are full instructions to complete the journal:

To see the balance of the account in AUD open the FX cashbook ❶ and click 'Show in AUD' at the top of the screen❷. This will show the transactions in AUD and the balance of the account in AUD based on the system FX exchange rate entered via Manage Static Data.

For instructions on how to update the FX exchange rate click here

To address the Gain/Loss ❸ a journal needs to be created to bring the FX account to nil in the AUD currency.

Note. all statutory reporting will be done in AUD and so the system relies on values in this currency not the foreign one.

To create the necessary journal:

1. Go into Financials ->Accounts -> Foreign Currency Gain (Loss). The account type is Asset Realisation.

2. Double Click to open the account 'Foreign Currency Gain (Loss) then click on New Journal Entry. The system will then know to create a journal entry with only an AUD value.

3. If the amount is a gain enter the amount as a Debit against the Foreign Currency Gain (Loss)❹, the Credit account is the FX Bank Account❺. The converse will apply in situations where a loss has been incurred.

Check that the journal has been applied correctly to the AUD value of the FX account.

NOTE: You may also choose to create the adjusting journal(s) at any point in time that you might want to recognise a FX gain or loss, rather than waiting for the closure of the account.  If large exchange rate movements occur with a particular currency, it may be prudent to recognise the gains or losses as they occur.