On November 1, 20X8, Denver Company Borrowed 500,000 Local Currency

Multiple Choice

On November 1, 20X8, Denver Company borrowed 500,000 local currency units (LCU) from a foreign lender evidenced by an interest-bearing note due on November 1, 20X9, which is denominated in the currency of the lender. The U.S. dollar equivalent of the note principal was as follows: In its income statement for 20X9, what amount should Denver include as a foreign exchange gain or loss on the note principal?

A) 15,000 gain
B) 25,000 gain
C) 15,000 loss
D) 40,000 loss