FinnCo sells goods to a customer in the United Kingdom for £10,000 on 15 November 20X1, with payment to be received in British pounds on 15 January 20X2. FinnCo’s functional and presentation currency is the euro. Spot exchange rates between the euro (€) and British pound (£) are as follows:

FinnCo’s fiscal year end is 31 December. How will FinnCo account for this foreign currency transaction, and what effect will it have on the 20X1 and 20X2 financial statements?

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15 November 20X1 31 December 20X1 15 January 20X2 1 = 1.460 1 = 1.480 1 = 1.475