Ball Corp. had the following foreign currency transactions
during year 1:
• Merchandise was purchased from a foreign supplier on
January 20, year 1, for the US dollar equivalent of
$90,000. The invoice was paid on March 20, year 1, at
the US dollar equivalent of $96,000.
• On July 1, year 1, Ball borrowed the US dollar equivalent
of $500,000 evidenced by a note that was payable in
the lender’s local currency on July 1, year 3. On December
31, year 1, the US dollar equivalents of the principal
amount and accrued interest were $520,000 and
$26,000, respectively. Interest on the note is 10% per
In Ball’s year 1 income statement, what amount should be included
as foreign exchange transaction loss as part of net income?