What amount of foreign exchange gain or loss should be reflected in McCarthy's 2017 consolidated net income?
a. $8,000 loss.
b. $10,000 loss.
c. $2,000 gain.
d. $5,000 gain.
McCarthy, Inc.'s Brazilian subsidiary borrowed 100,000 euros on January 1, 2017. Exchange rates between the Brazilian real (BRL) and euro (€) and between the U.S. dollar ($) and BRL are as follows:
_____________________ BRL per € ________ US$ per BRL
January 1, 2017 . . . . . . . . . BRL 4.2 ...............$ 0.28
Average, 2017 . . . . . . . . . . BRL 4.3 ...............$ 0.25
December 31, 2017 . . . . . . BRL 4.6 ...............$ 0.20