A company has a payable of 50,000 walsends (a currency of a foreign country). This liability arose from a purchase of inventory made on December 13, Year One that will be paid at the end of January Year Two. The inventory is still on hand at the end of the year. The company is now preparing a balance sheet as of December 31, Year One in terms of US dollars which is the company’s functional currency. One walsend was worth $.10 on December 13, Year One but one walsend is worth $.14 on December 31, Year One. In connection with the reporting of the inventory, which of the following statements is true?

ans is d

my question is how is it 2000 gain  acc to my calc its sjhould be 2000 loss

since inv on dec 11 is 5000 and dec 31 is 7000 so diff 2000 should be loss since it says thts the amt is payable as the co purchsed inv so now the co  had to pay 5000 on dec  11 and on dec the co has to pay 7000 so diff 2000 is loss ...right  then y it says gain...pls explain ...thanks in advance.

Please note:  there is an increase in the dollar value of the carried inventory at dec 31. This gain is what creates the positive translation adjustment in owners equity.