Home Discussion Practical Exercises Date of exportation for currency conversion

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  • Douglas Meadows
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    Post count: 25

    The law says invoices should be in English and USD. How does currency devaluation come into play when the invoice is in USD?

    9. Question 1 point
    Using this invoice and the following information, answer questions 53 through 59.

    The shipment is scheduled to arrive into the United States on April 1, 2005.
    On February 3, 2005 Commodity Chemicals Inc. was granted approval by Customs and Border Protection to use a Toxic Substance Control Act blanket certification when importing barium chloride.
    This shipment departed Jordan on March 16, 2005, when the official daily exchange rate was 0.7777 Jordanian dinar equals 1 U.S. dollar.
    On March 17, 2005, the Jordanian currency depreciated by 20%.

    The entered value for this shipment is ______.

    A. $ 236,000
    B. $ 303,459
    C. $ 183,537
    D. JD 111,392,000
    E. JD 236,000
    Incorrect. Correct choice is: B
    Explanation: Directive 3550-061

    admin
    Keymaster
    Post count: 29

    This question is from the April 2005 Test, Question 54.
    The invoice provided in the question shows an invoice value of 236,000 Jordanian dinar. We are told that the official exchange rate was 0.7777 Jordanian dinar to 1 USD.

    § 159.32 The date of exportation for currency conversion shall be fixed in accordance with § 152.1(c) of this chapter.
    § 152.1(c) “Date of exportation,” or the “time of exportation” referred to in section 402, Tariff Act of 1930, as amended (19 U.S.C. 1401a), means the actual date the merchandise finally leaves the country of exportation for the United States.

    This shipment departed Jordan on March 16, 2005, when the official daily exchange rate was 0.7777 Jordanian dinar equals 1 U.S. dollar and that is the exchange rate prevailing on the date of export. The currency devaluation by 20% is irrelevant here as it took place after the date of export.

    To convert foreign currency to USD, you need to divide the amount of foreign currency by its exchange rate with the US dollar.

    236,000/0.7777 = $303,459 and so the correct answer is answer choice B.

    There is a short cut method to find the correct answer as well. Regardless of the currency used in the invoice, the entered value has to be in USD and so we need to convert any foreign currency to USD by applying the exchange rate.
    Here we are told that 0.7777 Jordanian dinars = 1 USD
    So 1 Jordanian dinar = 1/0.7777 = 1.286 USD.
    The invoice value is declared to be 236,000 Jordanian dinars and its equivalent has to be a greater number in USD. The answer choices are:
    A. $ 236,000
    B. $ 303,459
    C. $ 183,537
    D. JD 111,392,000
    E. JD 236,000

    D and E can be eliminated as those answers are not in USD. That leaves us with A, B and C choices. C is a smaller figure which cannot be correct. A is the same figure as in Jordanian dinar which is also not correct due to the exchange rate not being 1 dinar = 1 USD.
    The only answer that fits that requirement is the sole remaining answer choice B $303,459. By this type of short cut method of thinking, you can solve this question in under half a minute and save time for other questions.

    • This reply was modified 1 year, 3 months ago by admin.
    • This reply was modified 1 year, 3 months ago by admin.
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