Issue with exchange rate while transferring amount from foreign currency to home currency account
hassanabbasi
Member Posts: 5
I recently transferred payment from my Foreign currency account (USD) to my home currency account (PKR). I wanted to record it in wave accounting, but having an issue with exchange rate.
I followed the instructions by waveapps, on how to transfer amounts between Foreign and home currency accounts (https://support.waveapps.com/hc/en-us/articles/115002033786). But, the issue I am facing is that, after adding income in home currency account and entering the exchange rate, when I mark the transfer, wave is resetting the exchange rate I set. And hence my account is not going to balance.
Please let me know if there is anyway I can get out of this situation.
Thanks in advance!
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Hi, @hassanabbasi.
There's always going to be a bit of discrepancy in your reports because of how Wave manage transactions in multiple currencies, but if you follow the instructions on that page, you should end up with the right balance in every account. The money lost or gained from applying your own exchange rate will only appear under Undeposited Funds.
All of the other numbers, as they appear on your reports, will still follow Wave's exchange rate, however, so that might be what you're seeing.
Here's a quick example, say we have a transfer $100 from a CAD account to a USD account, and I want to have the rate 1 USD = 1.2 CAD. The actual rate is around 1.28. The transaction page will look like this:
My balance for my USD account will read $128 because that's what it's worth according to Wave's rates, but I'll have moved all the right amounts.
@Alexia Yeah I followed the article and this is what I got. So, you're saying that the discrepancy will be there in Undeposited Funds account, where this account's balance should be 0 all the times. But due to this discrepancy Undeposited Funds account is not going to be 0.
Will I have to add a Journal Transaction to clear up this difference?
@hassanabbasi I had the same issue. I just did all the transfers as suggested by Wave, but skipped the step where you link the transfers to each other. My amounts in all my accounts are now correct, so I will not be following Wave's recommendation of linking the transfers - there is no use in that anyway as the accounting descriptions can be used to do that.
@mlombard In that case the amounts will be listed as Uncategorised Expense and Uncategorised Income. Which I think isn't good to be reflected in accounts because it is actually not an expense or income, but just a transfer.
What I'm going to do is following the article, how it describe to transfer between different currency accounts. And then I'd add a Journal transaction to Credit Undeposited Funds account with the difference in exchange rate, and Debit "Unrealised Loss on Foreign Exchange" with the same difference amount. @Alexia Is it correct to do?
@hassanabbasi I used a suspense transfer account instead for the ins and the outs.
Before that, I used to do it the way you suggest of doing it now - a 5th transaction that moves the FX difference from the account.
Sorry I don't understand what you're saying, can you please elaborate.