On January 1, 2016, the Sohape Corporation issued $ 100,000 par value, five- year bonds with a 3% stated interest rate. Interest is paid annually each December 31. The market rate of interest on the date of the bond issue was 2.5%. Below is the amortization table for the bond. Assume that Sohape elected the fair value option on the date of issue.

Required
Prepare the entry required to adjust the balance of the debt to fair value at the end of the first, second, and third years.

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Amortization Table Under Effective Interest Rate Method 3% Cash Interest 2.50% Effective Interest Premium Amortization Carrying Period 3.000 3,000 3,000 3.000 3,000 $15.000 $ 2,558 2,547 2.536 2,524 2,512 $12,677 S 442 453 464 476 488 52,323 Value $102,323 101,881 101,428 100,964 100,488 100,000 Fair Value $102,323 102.970 102.160 102,099 102,067 100,000 Total