On November 1, 20X8, Denver Company borrowed 500,000 local currency units (LCU) from a foreign lender evidenced by an interest-bearing note due on November 1, 20X9, which is denominated in the currency of the lender. The U.S. dollar equivalent of the note principal was as follows: In its income statement for 20X9, what amount should Denver include as a foreign exchange gain or loss on the note principal?
A) 15,000 gain
B) 25,000 gain
C) 15,000 loss
D) 40,000 loss

Question

On November 1, 20X8, Denver Company borrowed 500,000 local currency units (LCU) from a foreign lender evidenced by an interest-bearing note due on November 1, 20X9, which is denominated in the currency of the lender. The U.S. dollar equivalent of the note principal was as follows:  In its income statement for 20X9, what amount should Denver include as a foreign exchange gain or loss on the note principal?
A) 15,000 gain 
B) 25,000 gain 
C) 15,000 loss 
D) 40,000 loss

Quizplus · Accepted Answer

The Answer of On November 1, 20X8, Denver Company borrowed 500,000 local currency units (LCU) from a foreign lender evidenced by an interest-bearing note due on November 1, 20X9, which is denominated in the currency of the lender. The U.S. dollar equivalent of the note principal was as follows:  In its income statement for 20X9, what amount should Denver include as a foreign exchange gain or loss on the note principal?
A) 15,000 gain 
B) 25,000 gain 
C) 15,000 loss 
D) 40,000 loss

On November 1, 20X8, Denver Company Borrowed 500,000 Local Currency