Recognizing gains on derivative, financial instruments Togo Co. purchased merchandise from a vendor in England on November 20 for 500,000 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 be reported on Toigo's financial statements at December 31? A gain of $40,000 as a separate component of stockholders' equity. A gain of $40,000 in the income statement. A gain of $25,000 as a separate component of stockholders' equity. A gain of $25,000 in the income statement