Gate Inc. had a $30,000 credit adjustment for the year ended December 31, 20X2, from restating its foreign subsidiary’s accounts from their local currency units into U.S. dollars. Additionally, Gate had a receivable from a foreign customer payable in the customer’s local currency.

On December 31, 20X1, this receivable for 200,000 local currency units (LCU) was correctly included in Gate’s balance sheet at $110,000. When the receivable was collected on February 15, 20X2, the U.S. dollar equivalent was $120,000. In Gate’s 20X2 consolidated income statement, how much should be reported as foreign exchange gain in computing net income?

a. $0

b. $10,000

c. $30,000

d. $40,000 Select the best answers under each of two alternative assumptions:

(a) the LCU is the functional currency and the translation method is appropriate or

(b) the U.S. dollar is the functional currency and the remeasurement method is appropriate.