Variety Chips Company's primary business markets are in the United States and Mexico. In order to manage the currency fluctuations between the two countries, the company enters into a foreign currency cash flow hedge transaction at the beginning of Year 1 that will unwind in Year 2. Assuming that the ineffective portion of the foreign currency hedge results in a $24,000 loss and the effective portion of the hedge results in a $33,000 gain during the first year, how will the company report the hedge activity on its financial statements at the end of Year 1?

$33,000 gain reported on the income statement and $24,000 loss reported in other comprehensive income on the balance sheet.

$24,000 loss reported on the income statement (only)

$24,000 loss reported on the income statement and $33,000 gain reported in other comprehensive income on the balance sheet.

$9,000 net gain reported on the income statement.