Imp entered into the first forward contract to hedge a purchase of inventory in November 2010, payable in March 2011. At December 31, 2010, what amount of foreign currency transaction gain from this forward contract should Imp include in net income?

a. $0

b. $ 3,000

c. $ 5,000

d. $10,000 Items are based on the following:

On December 12, 2010, Imp Co. entered into three forward exchange contracts, each to purchase 100,000 euros in ninety days. The relevant exchange rates are as follows:

Spot rate Forward rate

(for March 12, 2011)

November 30, 2010 $.87 $.89 December 12, 2010 .88 .90 December 31, 2010 .92 .93