Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 21

On July 1, 2013, Houghton Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2014. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows:

In its 2014 income statement, what amount should Houghton include as a foreign exchange gain or loss on the note
a. $35,000 gain.
b. $35,000 loss.
c. $10,000 gain.
d. $10,000 loss.