ABC Inc. sold machinery on account to a U.S. based client on June 30^th, Year 1 in the amount of $100,000 U.S. On that date, $1US=$1.20 CAD. The account was settled on July 30^th, Year 1, when the rate was $1US=$1.22 CAD.
Assuming that ABC Inc. is a publicly traded enterprise that reports its results in Canadian dollars, the effect of this transaction on its financial statements would be a:

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The transaction results in a gain of $2,000 CAD because the Canadian dollar depreciated from $1.20 CAD to $1.22 CAD per US dollar between the sale date and the settlement date. The sale was made for $100,000 US, which was initially worth $120,000 CAD ($100,000 * 1.20) and settled for $122,000 CAD ($100,000 * 1.22), resulting in a gain of $2,000 CAD that flows to earnings.

ABC Inc Sold Machinery on Account to a U