[silvercamaro77]

I don’t think it should be a very difficult concept, but I get very confused about questions that reference changes in exchange rates, such as when there’s a significant decline in the US dollar or the US dollar appreciated against the dinero.

Can anyone point me to an explanation somewhere that I can review? I generally do okay when it’s specific and says $1.7 was 1 dinero, but I struggle with the words.

I have the NINJA materials, but had trouble finding it in the book to review so feel free to just point me to the pages there. I thought I’d be able to figure it out once I worked through several of the MCQ’s, but even after reading the explanations on there, I’m consistently getting them wrong.

AUD- 95
FAR- 75
BEC- 83
REG- 85

Officially done! Exclusively used NINJA for BEC, REG, and FAR

[Anonymous]

This is the one section that no matter how much I study it, I never get it. I usually get the appreciation/depreciation questions right by choosing the opposite of what the answer sounds like it should be, so I'm not really any help at all. I share your struggles! I took BEC yesterday & am moving on to FAR – which I've heard has more foreign currency stuff in it. Not looking forward to that!

[jm962011]

Sometimes it works best to put number with the words, epsecially if they give you the exchange rate. You know $1.7 USD = 1 Spanish dinero

If the value of the USD depreciated (decreased in value), it will now cost you $2 USD to buy 1 Spanish dinero

If the value of the USD appreciated (increased in value), it will now cost you $1 USD to buy 1 Spanish dinero

Becareful to only change one number and to change it the correct direction and remember whatever is happening to the USD, the opposite is happening to the other currency. Here is an example changing the dinero number

A depreciation of the USD = appreciation of the dinero so you could state it as $1.7 USD = .5 dinero

An appreciation of the USD = depreciation of the dinero so you could state it as $1.7 USD = 2 dinero

If they don't give you the exchange rate, make one up. $1 USD = 1 Spanish dinero. I had to do this on questions about the effect of overstating/understating CGS, or BI, or EI on NI.

[silvercamaro77]

@BoutTime4CPA- I'm glad to hear I'm not the only one! I feel like such an idiot for not getting it! It's been a while since I took FAR, but it seems like the foreign currency stuff was completely different and I didn't have much trouble with it, so maybe you won't either.

@jm962011- I try to put it into numbers every time, but I always do it wrong. I'm going to copy down your example and I think that will help me keep it straight. Thank you!

AUD- 95
FAR- 75
BEC- 83
REG- 85

Officially done! Exclusively used NINJA for BEC, REG, and FAR

[jm962011]

You're welcome. I guess it does make sense to say if the USD depreciated, change the USD in the exchange rate by the opposite direction. So if we typically think of depreciation as down, do the opposite and increase your USD in the exchange rate.

[Author]

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