On October 1, 2006, Velec Co., a US company, contracted to purchase foreign goods requiring payment in Qatari rials, one month after their receipt at Velec’s factory. Title to the goods passed on December 15, 2006. The goods were still in transit on December 31, 2006. Exchange rates were one dollar to twenty-two rials, twenty rials, and twenty-one rials on October 1, December 15, and December 31, 2006, respectively. Velec should account for the exchange rate fluctuation in 2006 as

  1. A loss included in net income before extraordinary items.
  2. A gain included in net income before extraordinary items.
  3. An extraordinary gain.
  4. An extraordinary loss.