Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 5

On October 1, 2011, Mud Co., a U.S.company, purchased parts from Terra, a Portuguese company, with payment due on December 1, 2011.If Mud's 2011 operating income included no foreign exchange gain or loss, the transaction could have
a.Resulted in an extraordinary gain.
b.Been denominated in U.S.dollars.
c.Generated a foreign exchange gain to be reported as a deferred charge on the balance sheet.
d.Generated a foreign exchange loss to be reported as a separate component of stockholders' equity.