During 2017, a U

question 19

Multiple Choice

During 2017, a U.S. company purchased inventory from a foreign supplier. The transaction was denominated in the local currency of the seller. The direct exchange rate increased from the date of the transaction to the balance sheet date. The exchange rate decreased from the balance sheet date to the settlement date in 2018. For the years 2017 and 2018, transaction gains or losses should be recognized as:

• A) 2017, gain; 2018, gain
• B) 2017, gain; 2018, loss
• C) 2017, loss; 2018 loss
• D) 2017, loss; 2018, gain

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Definitions:

Formal Statement

A structured, written document that presents financial or other significant data in a systematic format.