A UK Company That Reports Using IFRS Plans on Acquiring a a Building

Multiple Choice

A U.K. company that reports using IFRS plans on acquiring a building from a U.S. company, at a price denominated in U.S. dollars. The U.K. company locks in the price of the building, in pounds, using a forward purchase contract. The company reports a gain on the forward contract. When the gain from the forward purchase is reclassified from accumulated other comprehensive income, what is the effect?

A) Depreciation expense is reduced.
B) The equipment account is reduced.
C) A gain on hedging is reported in income.
D) When the equipment is sold, the gain on sale increases.