A USCorporation Owns 30% of a Foreign Corporation

Multiple Choice

A U.S.corporation owns 30% of a foreign corporation.The remaining 70% is owned by other foreign corporations not controlled by the U.S.corporation.The functional currency of the foreign corporation is the euro.The U.S.corporation receives a dividend equivalent to 50,000€.If the average exchange rate for the E & P to which the dividend is attributed is 1.2€: $1,the exchange rate at year end is .95€: $1 and on the date of the dividend payment is 1.1€: $1,what is the result to the U.S.corporation on receipt of the dividend?

A) The U.S.corporation receives a dividend of $45,455 and realizes an exchange gain of $3,788 [$45,455 minus $41,667 (50,000€/1.2) ].
B) The U.S.corporation receives a dividend of $45,455 (50,000€/1.1) with no exchange gain or loss.
C) The U.S.corporation receives a dividend of $41,667 and realizes an exchange loss of $3,788 ($41,667 minus $45,455) .
D) The U.S.corporation receives a dividend of $52,632 (50,000€/.95) with no exchange gain or loss.