Flapp Corporation, a U

Multiple Choice

Flapp Corporation, a U.S. corporation, conducts all of its transactions in the U.S. dollar. It sells inventory for $1 million to a Canadian company when the exchange rate is $1US: $1.2Can. The Canadian company pays for the inventory when the exchange rate is $1US: $1.25Can. What is Flapp's exchange gain or loss on this sale?

A) Flapp does not have a foreign currency exchange gain or loss, since it conducts all of its transactions in the U.S. dollar.
B) Flapp's account receivable for the sale is $1 million (when the exchange rate is $1US: $1.2Can.) and it collects on the receivable when the exchange rate is $1US: $1.25Can. Flapp has an exchange gain of $50,000.
C) Flapp's account receivable for the sale is $1 million (when the exchange rate is $1US: $1.2Can.) . It collects on the receivable at $1US: $1.25Can. Flapp has an exchange loss of $5,000.
D) Flapp's foreign currency exchange loss is $50,000.