Given that there appears to be nothing that stw can’t answer it might be worth checking something with the accountants here. Non accountants might find there are more interesting threads elsewhere 🙂

I’m running multicurrency accounts and am looking at how to book transfers between two currencies. So, home currency is DKK but I need to book a transfer between a EUR and USD account. You can’t do the transfer directly as it doesn’t involve the home currency so you have to go through and intermediate DKK account. So far so good. The problem is that I can see two ways of doing it and I’m wondering which is the preferred way:

1. Book a EUR->DKK transaction at the correct EUR/DKK exchange rate and then book a DKK->USD transaction but at a ‘funny’ rate that makes the end EUR/USD rate correct

2. Book a EUR->DKK transaction at the correct EUR/DKK rate, a DKK->USD transaction at the correct rate then add an exchange rate gain/loss transaction to make the whole thing balance.

It there a preferred method or even other possibilities?
Should I actually be using bombers or just get McMoonter in to fix it?

1. There is no correct rate as such as you haven’t done the trade, just use a mid market quote (i.e. ex commission), the derived rate will be fine. When Ipriced deals at a bank, GBP NZD rates were priced by going via the USD rates. If it is good enough for a real transaction it is good enough for a set of accounts. Booking a fx gain/loss would be a fiction and therefore best avoided.

mefty – you rock. Both for saving me from the ignominy of an orphan post and for giving me an answer that makes sense.

thanks

(plus it confirms what I thought which always feels comfortable)