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RenaS
September 11, 2024
Question

Home currency adjustment entries in migration from QB Desktop to QBO

  • September 11, 2024
  • 2 replies
  • 0 views

Hi there.

 

We recently migrated from Quickbooks Desktop to Online.  In Desktop there was a home currency adjustment process that we would run at year end to adjust two of our foreign currency bank accounts to the revalued USD balance for the balance sheet with the resulting foreign currency gain/ loss to the Profit & Loss statement.  Upon conversion these year end adjustment entries did not properly migrate to QBO.   They are now showing as unreconciled items in our bank reconciliation and the incorrect balances are appearing in our chart of accounts and balance sheet.  I've been told by the QBO support desk that QB Desktop and QBO are different products and processes and these amounts can only be deleted or journalled out.   To delete them will result in a prior period adjustment, which we don't want.   To journal them out will create an adjustment in the current year, which is not ideal but might be our only option.  However, these amounts will forever remain as unreconciled items in our bank reconciliation process of which I need a way to remove or hide them.  Additionally one of the bank accounts has closed and should be 0 but I'm showing a negative balance in the foreign currency in the Chart of Account and a different amount on the Balance sheet, which is USD.   These amounts need to be zero.  I have no idea on how to resolve this.   The QBO support told me to consult my accountant of which I am the accountant and a CPA.   I know what the issue is, however, I don't know how to resolve it in this software.

2 replies

S
Shania_C
September 11, 2024

We appreciate your effort in actively working to adjust home currency entries in migrating from QuickBooks Desktop to QuickBooks Online (QBO), @RenaS.

 

Firstly, when using QBO Multi-Currency, transactions involving three distinct currency types will not transfer to QuickBooks Online. Additionally, any transactions that used currencies in QuickBooks Desktop that do not exist in QBO will not be carried over. This is why the year-end adjustment entries did not convert correctly to QBO, resulting in unreconciled items in your bank reconciliation and inaccurate balance amounts being displayed in the chart of accounts and balance sheet.

 

Furthermore, since these transactions are currently displaying as unreconciled items in your bank reconciliation and are causing incorrect balance amounts to appear in your chart of accounts and balance sheet. We can handle this case by reviewing the transactions making sure that the transaction is marked as "R" and performing a manual reconciliation for that period:

 

  1. At the gear icon click Chart of Accounts.
  2. Look for the affected bank account and click View register.
  3. Locate the transaction and if the transaction is reconciled, you’ll see an “R” under the checkmark ✔ column.
  4. Change the reconcile status by double-clicking the tile. From blank or Cleared (C) to Reconciled (R).
  5. Click Save and select Yes to confirm the action.
  6. Close the account register.

 

You can also use this link for reference: Undo or remove transactions from reconciliations in QuickBooks Online.

 

Lastly, the bank accounts that have been closed have a balance of zero, but instead, they are displaying a negative balance in the foreign currency on the Chart of Accounts and a different amount in USD on the Balance Sheet. This discrepancy occurred because transactions involving three distinct currencies did not move to QuickBooks Online, and any transactions that used currencies in QuickBooks Desktop that do not exist in QBO will not be migrated. This causes the transactions to not successfully move during the migration process.

 

Moreover, you can check this article to help you understand how your features and data move from QuickBooks Desktop to QuickBooks Online: Learn how features and data move from QuickBooks Desktop to QuickBooks Online.

 

Additionally, use this guide anytime you need help doing or fixing a reconciliation in QuickBooks: Learn the reconciliation workflow in QuickBooks.

 

You can always get back to us if you have other concerns or questions about managing your transactions or accounts in QuickBooks. We'll make sure to respond as soon as we can, @RenaS. Keep safe always!

R
RenaSAuthor
September 12, 2024

Hi Shania,

 

The accounts impacted only utilize one currency KYD and are represented in our financial statements in converted USD (home currency).   Would you please advise what you mean about 3 distinct currency types that do not transfer over?   The currency list in QBDesktop is the same as the currency list in QBO and our only utilized currency is KYD.

 

I have been able to change the reconciliation status of the impacted accounts thanks to your explanation below and that removes the issue from the reconciliation process, however, I still have the issue at hand that these transactions, which are year-end journals created in QBDesktop for the home currency adjustment are impacting my chart of account balance and my balance sheet figure.  These entries are generating  a -$601.43 in my KYD Chart of Account and -159.90 on my Balance Sheet when the amount should be 0 for both. See attachment of the entries in the Chart of Account, note that it is only the historical 2022 & 2023 home currency journal entries resulting in the -$601.43 balance.   The last transaction in this account was on Sept. 3, 2024 for KYD $155.03 which brought the KYD Chart of Account balance to 0.   The exchange from KYD to USD should be 1.2195122.   It appears that the year-end journals on conversion may have converted at an exchange rate of 1.0.    If I delete these journals from 2022 & 2023 so that my Chart of Account balance is correct it will end up revaluing my balance sheet at Dec. 31 2022 & 2023, which is not what we want.  Any adjustments will need to be run through the current year.

JenoP
JenoP
September 12, 2024

I appreciate your response to keep us updated after following the suggested steps, RenaS. Let me clarify the currency situation when migrating from QuickBooks Desktop to QuickBooks Online.

 

Only transactions with 3 different currency types won't move to QuickBooks Online. The list of currencies you have configured in the Desktop version will carry over.

 

However, if those currencies are not supported in QuickBooks Online, the transactions that uses them will not migrate. 

 

When it comes to adjusting for currency exchange rate changes during the migration, QuickBooks Online has a currency revaluation feature. This tool allows you to update the home currency amounts of outstanding foreign balances by re-calculating them using a new exchange rate. These revaluations impact your balance sheet accounts.

 

Let me outline the steps for you: 

 

  1. Go to the Gear or Settings icon and select Currencies.
  2. Look for the currency you want to adjust.
  3. Proceed to the Actions column, then select the small arrow ▼ icon.
  4. Click Revalue Currency.
  5. Select a date (today or a day in the past) to run a currency revaluation.
  6. Select whether you'd like the revaluation to be based on the market exchange rate or a rate you specify.
  7. Choose the account(s) you want to apply the revaluation to.
  8. Click Revalue.

 

You can also refer to this article for additional guidance on this process: Enter Home Currency Adjustments For Your Foreign Balances.

 

You may want to check out these reference materials that provide guidance and information for the next steps after transitioning to QuickBooks Online:

 

 

Please feel free to visit us again in the forum for additional help as you familiarize yourself with QBO's features and functions. We are available to continuously offer assistance as questions arise during your adjustment to the new platform.

FishingForAnswers
FishingForAnswers
September 12, 2024

@RenaS  Imagine the industry leader in accounting software being unable to get its accounting products to successfully migrate from one to the other when they are trying their hardest to get people to abandon Desktop.

 

I doubt this will be the only problem you face with your downgrade to QBO; since this was a recent move, it may not be too late for you to turn back.

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RenaSAuthor
September 12, 2024

Truly bananas.   We were very happy with the Desktop product and were forced to migrate to QBO due to discontinued service support for Desktop.   We had to engage MMC Convert to help us with the conversion and spent time and money when a lot of our customer data and lists did not convert (frustratingly so), including hundreds of memorized transactions (now recurring transactions in QBO).  There is significant functionality lacking in QBO that we had in Desktop that we've had to find other ways of doing things.  We have not gained any benefits from QBO apart from continued headaches.   For the trouble it has caused it would have been easier to migrate to a completely different software program.

    R
    RenaSAuthor
    September 16, 2024

    For all of you out there facing the same problem that we did, here is how I resolved the issue BY MYSELF I might add after getting completely useless advice from Quickbooks support.  If Quickbooks support people could actually be trained in their software and the migration issues it would be far more helpful that having multiple Managers contact me linking me to articles that do not pertain to the situation at hand and then apologizing for any inconvenience caused by the new software without actually trying to resolve my issues.   It makes me seriously want to migrate to a different software in the future.  Perhaps their customer service is better.

     

    So here is the solution to all of you out there encountering the same issues:

     

    It appears that upon migration QBO recalculates any home currency adjustments and so they are double counted in the records.  Historical balances are ok, but the issue is with the current chart of account (bank account, account receivable, account payable, depending on which account you adjusted in Quickbooks Desktop), the incoming bank reconciliation and the related balance sheet account.   Steps to correct as follows:

     

    1.   The historical home currency adjustments created in QuickBooks Desktop are the amounts impacting your current chart of account and bank reconciliation.   In the current year you will need to reverse these entries as they are now being double counted.   In my case I had a credit balance in my bank account, which shouldn't have been so I created the following journal entry:

    Dr. Bank Account (Balance Sheet Account)

    Cr. Foreign Currency Gain/ Loss (Profit & Loss Account)

    This brought my chart of account in the foreign currency to the correct balance and created an offsetting entry in my bank reconciliation that I could tag off against each other so that there was no longer a historical difference. 

    2. Now my balance sheet was still showing an incorrect balance.  I therefore went into one of the last entries in that account and manually over-rode the currency exchange to a random currency exchange rate that would bring my balance sheet account to the correct dollar amount.   This left the chart of account in the foreign currency at the correct balance and adjusted my USD currency balance sheet to the correct balance.

     

    Hope this helps you!

     

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