Foreign currency Transactions

Question 1

Accounts payable
From a USD Buyer’s view what happens when the USD/EUR rate Increases? (.i.e USD/EUR 1.20 to US/EUR1.25)

Answer 1

The USD depreciates = Foreign currency loss.

Question 2

Accounts payable
From a USD Buyer’s view what happens when the USD/EUR rate decreases? (.i.e USD/EUR 1.20 to US/EUR1.10)

Answer 2

The USD appreciates = Foreign currency gain