Question: On December 1, 2014, SMC entered into a transaction to import raw materials from a foreign country. The account is to be settled March 1 with the payment of 50,000 euros. The spot rate for euros on December 1 was $1.4/euro and on March 1 was $1.44/euro. What is the total amount of the transaction gain or loss to be included in net income?
- There is no gain or loss. The change in the value of the raw materials offsets the change in the payable
- $2,000 gain
- $2,000 loss
- No gain or loss is recognized until the raw materials are sold