Note: This is a Kaplan CPA Review Question
On September 1, 20X1, Bain Corp. received an order for equipment from a foreign customer for 300,000 local currency units (LCU) when the U.S. dollar equivalent was $96,000. Bain shipped the equipment on October 15, 20X1, and billed the customer for 300,000 LCU when the U.S. dollar equivalent was $100,000. Bain received the customer's remittance in full on November 16, 20X1, and sold the 300,000 LCU for $105,000. In its income statement for the year ended December 31, 20X1, Bain should report a foreign exchange gain of
A) $9,000
B) $4,000
C) $0
D) $5,000

Question

Quizplus · Accepted Answer

Bain Corp. should report a foreign exchange gain of $5,000, which is the difference between the U.S. dollar equivalent at the time of billing ($100,000) and the amount received when the LCU was sold ($105,000).

Note: This Is a Kaplan CPA Review Question