A U.S. company has purchased a plant in the United Kingdom in the beginning of the year for £10 million when the pound was $1.50/£. At the end of the year the pound depreciated to $1.25/£.
A) the U.S. company will have to report a realized loss of $2.5 million.
B) the U.S. company will have to report a realized gain of $2.5 million.
C) the U.S. company will have to report a unrealized loss of $2.5 million.
D) the U.S. company will have to report a unrealized gain of $2.5 million.
E) the U.S. company will report neither a gain or a loss.
Correct Answer:
Verified
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