Canada bank transfers between multiple currency bank accounts

[lara mirecki]

Hello

I would like to know how I record bank transfer transactions that are CAD to USD. They are not related to a payable or a receivable. Just straight bank transfers between bank accounts with different currency.

The companies are related and there are intercompany balances.

I report in CAD

Thank you
Lara

 

[kirby]

Assume you mean you are moving funds from a CAD denominated bank acct to a USD denominated bank acct and you only have a CAD based GL.

The bank will charge a FX fee for exchanging CAD for USD so record that as an expense. Record the amount of the net USD received in the bank at the current fx exchange rate in CAD. Then at each balance sheet date figure out how much the USD bank acct is worth in CAD and adjust your CAD acct that represents the USD bank acct. Record the difference as a FX gain or loss.

 

[lara mirecki]

Thank you so much. Instead of recordning in the USD asset account the CAD amount, can I create a pairing account for the USD bank account in my CAD Balance Sheet? Eg. USD bank account number 1012 and USD Bank pairing account 1013 (combined they are the CAD amount)?
Then at month end is it unrealized or realized FX gain/loss?
I really appreciate your advice.

Regards
Lara

 

[kirby]

Well, almost, but I say no because the offsetting entries to acct 1012 would also have to be in usd and then need offsets and soon the whole thing is a mess.
If you had a true multicurrency gl, you would post the usd activity to the usd cash acct and related usd accts then the gl would show everything in the true CAD accts.

Lacking that, I suggest track your USD activity in Excel then periodically or at least monthend convert all that activity to CAD and post to your CAD books. It’s a pain but keeps your sanity.
And when you calculate fx gain or loss it is unrealized until you actually trade CAD for USD.

 

[lara mirecki]

thank you so much.
There are 2 transactions happening, one being funds transferred from our CAD bank account to our USD bank account. Two being transfer of shareholder USD to company USD bank account.
So I should convert and record in shareholder account and USD bank account the equivalent CAD amount?
And this is an unrealized gain, until the funds are transferred back (from USD bank account to CAD bank account), is that correct?
is the unrealized gain an equity account? and a realized gain an income statement account?
I really appreciate your time and help.

Regards
Lara

 

[kirby]

Getting lost

In first post you said companies are related and there are intercompany balances. Is that your CAD company and a USD parent? or your CAD company and a USD sister company, which is not the parent?
And in above post, the second transaction “to company usd bank acct” means to parent company bank acct or to a sister usd company bank acct you control or to a third party company bank acct?

 

[lara mirecki]

I apologize. All companies are Canadian. One of our Canadian companies has 2 bank accounts, one is CAD, the other is USD bank account. To put funds in the USD bank account we have made transfers from parent company CAD bank account. There was also a transfer from the owner from him personal USD bank account to the company with a USD bank account.
I am looking to figure out how to record a transfer from Company A CAD bank of $10K to Company B USD bank.
I also need to record the owner's personal transfer from his personal USD bank account to Company B USD bank. The owner is Canadian
I really am very sorry for not being clear. and I sincerely appreciate your time and help

 

[kirby]

In summary
There is a parent company, which is Canadian “all companies are Canadian”
A company A which is Canadian and has a CAD bank acct
A company B which is Canadian and has a CAD bank acct and a USD bank acct
All books are in CAD
So if above is not correct, please tell me, please. Or when you say from Company A to Company B is A the Parent or a sub like B?

Question
When owner puts USD into Company B is that as a loan from owner or as additional capital from owner?

 

[lara mirecki]

Correct. All of it.
And yes, when the owner puts USD into Company B that is a loan from owner or as additional capital from owner

 

[kirby]

Sending you info in private message center.
Sign in to the forum then click the envelope icon way at the top.