On May 1, 2011, Mosby Company received an order to sell a machine to a customer in Canada at a price of 2,000,000 Mexican pesos. The machine was shipped and payment was received on March 1, 2012. On May 1, 2011, Mosby purchased a put option giving it the right to sell 2,000,000 pesos on March 1, 2012 at a price of $190,000. Mosby properly designates the option as a fair value hedge of the peso firm commitment. The option cost $3,000 and had a fair value of $3,200 on December 31, 2011. The following spot exchange rates apply:

Mosby's incremental borrowing rate is 12 percent, and the present value factor for two months at a 12 percent annual rate is .9803. What was the impact on Mosby's 2012 net income as a result of this fair value hedge of a firm commitment? Please provide detailed calculation.

A.	$1,800.00 decrease.

B.	$2,500.00 increase.

C.	$2,500.00 decrease.

D.	$188,760.60 increase.

E.	$188,760.60 decrease.