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 received an order for equipment from a foreign customer for 300,000 LCU when the U.S. dollar equivalent was $96,000, and Bain sold the 300,000 LCU for $105,000. Therefore, Bain received a foreign exchange gain of $9,000. The fact that Bain billed the customer for 300,000 LCU when the U.S. dollar equivalent was $100,000 is not relevant for calculating the foreign exchange gain.