Allow me to add some more complexity.
To test these samples when a sequence of transaction occurs, wherein the
exchange rate might actually change over time, I've created a sample with 3
purchases in 3 different currencies (BRL, USD, and GBP). Default paypal
account is EUR (all payments are automatically converted into EUR), but I
want to settle in AED, locking the currency exchange rate in a way that
does not expose me to that currency price anymore.
To be more realistic, let's say I do that sort of "hedging" for only 2 out
of my 3 purchases (sometimes I forget to settle).
I found yet a 3rd possible way to represent this.
Option #1
2021/03/31 * KFC
Expenses:Food 150.00 BRL {=0.6667 AED}
Assets:Paypal -25.00 EUR
2021/04/01 * Currency Exchange
Assets:Paypal 25.00 EUR
Assets:Paypal -100.00 AED
2021/04/20 * Starbucks
Expenses:Food 30.00 USD
Assets:Paypal -20.00 EUR
2021/04/28 * McDonalds
Expenses:Food 50.00 GBP {=5.4 AED}
Assets:Paypal -60.00 EUR
2021/04/29 * Currency Exchange
Assets:Paypal 60.00 EUR
Assets:Paypal -270.00 AED
Option #2
2021/03/31 * KFC
Expenses:Food 150.00 BRL @@ 100 AED
Assets:Paypal -25.00 EUR
Assets:Paypal 25.00 EUR ; [=2021/04/01]
Assets:Paypal -100.00 AED ; [=2021/04/01]
2021/04/20 * Starbucks
Expenses:Food 30.00 USD
Assets:Paypal -20.00 EUR
2021/04/28 * McDonalds
Expenses:Food 50.00 GBP @@ 270 AED
Assets:Paypal -60.00 EUR
Assets:Paypal 60.00 EUR ; [=2021/04/29]
Assets:Paypal -270.00 AED ; [=2021/04/29]
Option #3 (new)
2021/03/31 * KFC
Expenses:Food 150.00 BRL {=0.6667 AED} @@ 25 EUR
Assets:Paypal -25.00 EUR
Assets:Paypal 25.00 EUR @@ 100 AED ; [=2021/04/01]
Assets:Paypal -100.00 AED ; [=2021/04/01]
2021/04/20 * Starbucks
Expenses:Food 30.00 USD
Assets:Paypal -20.00 EUR
2021/04/28 * McDonalds
Expenses:Food 50.00 GBP {=5.4 AED} @@ 60 EUR
Assets:Paypal -60.00 EUR
Assets:Paypal 60.00 EUR @@ 270 AED ; [=2021/04/29]
Assets:Paypal -270.00 AED ; [=2021/04/29]
My question remains:
1) What is the difference between the above options?
2) What is the best way to record these transactions?
Many thanks, Paulo
On Tuesday, December 7, 2021 at 10:52:46 PM UTC+4 POliveira wrote:
> Dear all,
> I have been playing around with commodities because I frequently spend
> money in different currencies and I then settle it with an internal
> currency exchange within my own accounts.
>
> I would like to understand if the following 2 samples are exactly
> equivalent or, otherwise, what distinguishes them.
>
> Sample #1
>
> 2021/05/20=2021/05/22 * Starbucks
> Expenses:Food 100.00 USD {=0.8 GBP}
> Assets:Paypal -90.00 EUR
>
> 2021/05/31 * Currency Exchange
> ; Starbucks payment settlement
> Assets:Paypal 90.00 EUR
> Assets:Paypal -80.00 GBP
>
> Sample #2
>
> 2021/05/20=2021/05/22 * Starbucks
> Expenses:Food 100.00 USD @@ 80.00 GBP
> Assets:Paypal -90.00 EUR
> Assets:Paypal 90.00 EUR ; [=2021/05/31]
> Assets:Paypal -80.00 GBP
>
> What I am trying to record here is the following:
> On May 21 I use my paypal card to pay a bill of 100 USD at Starbucks.
> My paypal's default account is EUR, therefore it debits 90 EUR from my
> wallet (automatic conversion).
> My income is in GBP so I rather settle my expenses in that same currency,
> therefore I do a currency conversion within my Paypall app, buying 90 EUR
> with 80 GBP. Because this is a manual process, sometimes it happens only a
> few days later (on May 31 in this example).
>
> Would you agree with my way of recording these transaction or would you do
> it differently?
>
> Many thanks, POliveira
>
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