Was this a realized or unrealized exchange gain/loss?
During my QuickBooks demonstration, a lady asked me, ‘I have a US dollar bank account, I deposited US$10,000.00 into this account when the exchange rate was at 1.42 (Home currency was in Singapore dollar). This month, my exchange rate for US dollar against Singapore dollar was 1:1.38. So, how should I record the ‘realized’ exchange loss of S$400.00 in this case?’
I consider it as ‘unrealized’ exchange loss instead of ‘realized’ exchange loss; as the US$10,000.00 was still physically in the bank account. Unless, we physically withdraw out the amount from the US dollar bank account then it will be consider as realized exchange loss. Am I correct? Let me know if you think that I should consider it as a ‘realized’ exchange loss instead of ‘unrealized’ exchange loss.
If this were to be an unrealized exchange loss; then, how should I do a home currency adjustment in QuickBooks?
Home currency adjustment can be done via a General Journal Entry. For QuickBooks 2009/10 (Asia) version, go to Company menu, and select Make General Journal Entry function.
From the Make General Journal Entry form, ‘check’ the check box for ‘Home Currency Adjustment’ which located at the bottom of the Make General Journal Form. Then, enter your Journal detail such as date, entry number and accounts to be debited or credited.
For this case, you can debit S$400.00 into Unrealized Exchange Gain/Loss account (Change this account to Realized Exchange Gain/Loss account, if you think that this exchange loss should be realized) and credit S$400.00 into US dollar bank account.