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:
Date____________________________________ Amount
July 1, 2013 (date borrowed) . . . . . . . . . . . . . . . . . $195,000
December 31, 2013 (Houghton's year-end) . . . . . . . 220,000
July 1, 2014 (date repaid) . . . . . . . . . . . . . . . . . . . . 230,000
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.