Question: 14. Walker, Inc., a US corporation, ordered a machine from Nippon Corporation of Japan on July 15, 2010, for 1,000,000 yen when the spot rate

14. Walker, Inc., a US corporation, ordered a machine from Nippon Corporation of Japan on July 15, 2010, for 1,000,000 yen when the spot rate for yen was 95 yen to the US dollar.

Nippon shipped the machine on September 1, 2010, and billed Walker for 1,000,000 yen. The spot rate was 97 yen to the US dollar on this date. Walker bought 1,000,000 yen and paid the invoice on October 25, 2010, when the spot rate was 100 to the US dollar. In Walker’s income statement for the year ended December 31, 2010, how much should be reported as foreign exchange gain?

a. $0

b. $217.04

c. $526.32

d. $743.36

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