Recognizing gains on derivative financial instruments Our company uses the $US as its functional currency and purchased merchandise from a vendor in Eng- land on November 20 for 208,000 British pounds. Payment was due in British pounds on January 20. The spot rates to purchase one pound were as follows: November 20 December 31 January 20. How should the foreign currency transaction gain or loss be reported on our company's financial state- ments at December 31? b. A gain of $10,400 in the income statement A loss of $10,400 in the income statement $1.27 1.30 1.32 d. A gain of $6,240 in the income statement A loss of $6,240 in the income statement

Recognizing gains on derivative financial instruments Our company uses the SUS as its functional currency and purchased merchandise from a vendor in England on November 20 for 208,000 British pounds. Payment was due in British pounds on January 20. The spot rates to purchase one pound were as follows: How should the foreign currency transaction gain or loss be reported on our company's financial statements at December 31 ? a. A gain of $10,400 in the income statement c. A gain of $6,240 in the income statement b. A loss of $10,400 in the income statement d. A loss of $6,240 in the income statement