On December 12, Year 1, a company entered a forward exchange contract to sell 100,000 euros in 90 days. The relevant exchange rates are as follows:
Forward rate for
Date Spot Rate March 12, Year 2
December 12, Year 1 $0.88 $0.90
December 31, Year 1 $0.98 $0.93
The forward contract is being used for speculation. At December 31, Year 1, what amount of foreign currency transaction gain or loss should the company include in income from this forward contract?
a. $0
b. $3,000 loss
c. $3,000 gain
d. $10,000 loss
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