Transfer form 1 Currency A/C to another

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This support notes are suitable for:

• ABSS Premier

Introduction

For businesses that have international offices, it is not uncommon to have foreign bank accounts and need to transfer from one foreign currency bank account to another foreign currency bank account. This Support Note outlines the procedures to record these transactions.

Are there any new accounts I need to set up?

You will need to setup a new asset account called Currency Transfer Holding. This account is setup as a local currency account as shown below :

What is the process for recording the transfer?

1. Enter a Spend Money transaction. Click the Currency button and change the Currency to the foreign currency where you are transferring funds from.
2. The exchange rate needs to be changed to the exchange rate between Australian dollars and the currency being transferred from.
3. Change the account in the top left Pay from Account field to the Foreign Currency Bank Account. This is the foreign bank account you are transferring funds from. Make the Allocation Account the Currency Transfer Holding.
4. Enter the amount that you are transferring from in the foreign currency, the correct date, and record the transaction. MYOB will calculate the value of the transfer into the foreign currency where you will be transferring the funds to and store this value in the Currency Transfer Holding Account. Click Record.
5. Enter a Receive Money transaction. Click the Currency button and change the Currency to the foreign currency where you are transferring funds to.
6. The exchange rate needs to be changed to the exchange rate between Australian dollars and the currency being transferred to.
7. Change the account in the top left Deposit to Account field to the Foreign Currency Bank Account you are transferring to. Make the Allocation Account the Currency Transfer Holding Account.
8. Enter the amount that you are transferring in the currency of the Bank Account you are transferring to. This amount is the value of your Currency Transfer Holding account. Click Record. The end effect is the Currency Transfer Holding account will be zero.

Example

I want to transfer USD $100.00 from my US bank account to my Euro bank account. For this example we will consider present exchange rates of:

USD $1 = EURO €0.8333333     or     EURO € 1 = USD $1.20

AUD $1 = EURO €0.625            or     EURO € 1 = AUD $ 1.60

AUD $1 = USD $ 0.75               or     USD $1 =AUD $ 1.333333

Step 1

Enter a Spend Money transaction, ensuring you change the Currency to USD and enter the Transaction Exchange Rate as 1.333333.

Step 2

In the top left corner of the Spend Money screen, change the account to the US Bank account. Enter the amount as $US100 and select the allocation account 1-1160 Currency Transfer Holding.

Once this transaction is recorded, $US100 is credited from the US bank account and placed in the Currency Holding Account, this account will show a balance of $133.33. This is the value of the US dollars after it has been converted to Australian dollars based on the transaction exchange rate.

Step 3

Record a Receive Money transaction, ensuring you change the Currency to Euros and the Transaction Exchange Rate to 0.625.

Change the account in the top left corner to the Euro Bank Account, and enter the amount that is stored in the Currency Transfer Holding account.

To calculate the amount of Euros to be deposited, use the following calculations;

€1 = AUD $1.6

€ ? = AUD $133.33

AUD $133.33 / 1.6 = € 83.33

Once this Spend Money Transaction has been recorded, it should leave the Currency Transfer Holding account with a zero balance.

If you have a few cents balance in Currency Transfer Holding account, a General lournal entry can be done, allocated to the Currency Gain/Loss Account as this difference can be caused due to rounding in different exchange rates.