What is the amount of the foreign exchange gain or loss recognized on the 2016 Income Statement as a result of revaluing the loan payable?
A) A CDN$10,000 loss.
B) A CDN$5,000 loss.
C) A CDN$5,000 gain.
D)A CDN$10,000 gain.

Question

Quizplus · Accepted Answer

The loan payable is a liability, so a decrease in its value (revaluation loss) will result in a gain on the income statement. The revaluation loss is CDN$10,000, so the gain recognized on the income statement will be CDN$5,000.

What Is the Amount of the Foreign Exchange Gain or Loss