Trente Switch and Signal Sold Equipment to a Canadian Transportation

Trente Switch and Signal sold equipment to a Canadian transportation company at a price of 300,000 Canadian dollars with payment due in 60 days.On the date of sale,the exchange rate was 1.50 Canadian dollars per U.S.dollar.Trente decided to hedge the risk of currency fluctuations by purchasing 300,000 Canadian dollars with payment due in 60 days.If the exchange rate in 60 days is 1.25 Canadian dollars per U.S.dollar,Trente Switch and Signal will:

A) Recognize a net gain of $40,000 on the two transactions.
B) Recognize a $40,000 gain when it collects the receivable and incur a $40,000 loss when it pays the liability.
C) Incur a $40,000 loss when it collects the receivable and recognize a $40,000 gain when it pays the liability.
D) Incur a net loss of $40,000 on the two transactions.