The balance in Simpson Corp.’s foreign exchange loss account was $15,000 on December 31, 20X2, before any necessary year-end adjustment relating to the following:

(1) Simpson had a $20,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 20X2.

(2) Simpson had an account payable to an unrelated foreign supplier, payable in the supplier’s local currency on January 27, 20X3. The U.S. dollar equivalent of the payable was $100,000 on the November 28, 20X2, invoice date, and $106,000 on December 31, 20X2.

In Simpson’s 20X2 consolidated income statement, what amount should be included as foreign exchange loss in computing net income?

a. $41,000

b. $35,000

c. $21,000

d. $15,000 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.