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What is the amount of the foreign exchange gain

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Question - XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk.

The following exchange rates were in effect throughout the term of the loan:

January 1, 2019 US $1 = CDN $1.1500

December 31, 2019 US $1 = CDN $1.1490

December 31, 2020 US $1 = CDN $1.1485

December 31, 2021 US $1 = CDN $1.1483

December 31, 2022 US $1 = CDN $1.1487

The average rates in effect for 2019 and 2020 were as follows:

2019: US $1 = CDN $1.1493

2020: US $1 = CDN $1.1487

What is the amount of the foreign exchange gain or loss recognized on the 2019 Income Statement as a result of revaluing the loan payable?

Reference no: EM133137240

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