Re: Proposal for 1.4: CoA structure redesign

["Chris Travers" <..hidden..>]

On 10/30/07, Ed W <..hidden..> wrote:
> Hi
>
> > It seems to me exchange rate is more a property of a single
> > transaction rather than a property of a single date.  Of course
> > exchange rates should still be retrieved from a central authority, but
> > it must be possible to deviate from them on a per transaction basis.
>
>
> Accountants don't tend to do it that way.  The idea is that you have a
> theoretical rate in effect on a given transaction, then if your actual
> rate beats that then you have an FX gain (or loss if not).

hmmm....  I tend to think of FX gain and loss as what happens over
time when you have accounts in different currencies.

This may be splitting hairs but I would say you have a theoretical buy
or sell rate plus fees associated with that transaction to the
financial services businesses.

For example, suppose I go to Canada and use my credit card to purchase
something for $100.  Suppose (not unrealistic at the moment) that the
exchange rate for this transaction is 1:1 but that my credit card bank
charges a 1% exchange fee.

The actual transaction looks like
$100 as the expense
$1 for the bank fee.

My total paid is $101, but I know where my money is going.

I can imagine some businesses (particularly forex trading houses)
which might need to tie to transaction, but they probably aren't using
LedgerSMB.



> (so if you transfer out of
> your Paypal account at the atrocious rate then this shows as a profit on
> the original transaction, plus an fx loss due to Paypal)

I think the key is to separate bank fees from forex issues.  This area
could use a great deal of work on automating, but is more complex than
simple forex issues.  The Paypal difference isn't really a forex loss.
 It is actually a Paypal service charge.

>
> However, the UI is probably missing for all this right now and certainly
> in SL you just have to figure out all the bits yourself and type them in
> as a GL entry...

I think we need to be looking at how to automate this.  I am thinking
of having the additional fees go into selected expense accounts, and
allow for essentially a linear mapping of charges (y=mx + b).

Maybe something like:
CREATE TABLE forex_fee (
     asset_account_id int references account(id) not null unique,
     expense_account_id int references account(id) not null,
     coefficent numeric not null default 0,
     fixed_cost numeric not null default 0,
     CHECK(coefficient < 1 AND coefficent > 0)
);

Fees would then be calculated as:
coeficient * amount + fixed_cost.

>
> > Also, a question from the user interface point of view: When I deposit
> > a USD cheque into a CAD account, I will know from my deposit
> > adjustment the exact CAD amount for that deposit.  Currently with
> > 1.2.x I have to manually calculate the effective exchange rate when
> > entering the deposit because there is no way to say "I deposited
> > $100USD which resulted in $96 CAD".
> >
>
> Again, the idea is that you deposited $100, which became $98CAD, less
> the bank skimmed you $2, which is your FX loss

A second option might be to allow you to enter in the amounts on both
sides of the transaction and automatically calculate the service
charge.

>
> The only thing missing really is a new data entry screen to put this lot
> in.  The rest is just a case of ledger entries...

In general agreed.  It would also be nice to include an ability to
automate some of the charges to the best extent possible.

Best Wishes,
Chris Travers
>
>
> Ed W
>
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