Accounting for Fair Value Hedge: Put Option PierTwo purchased at par, 60, $100, 5% bonds of Supplier Inc. on January 1, 2020. In order to avoid exposure to fluctuations in the fair value of Supplier Inc. bonds, Pier Two acquires a 12-month put option on January 1, 2020, to sell 60 bonds of Supplier Inc. at a price of $100 per bond. The hedge is considered to be highly effective. On December 31, 2020, the market price per share of Supplier Inc. bonds fell to $90 per bond while the value of the put option is estimated to be $588. For simplicity, ignore interest on the bonds and assume the purchase price of the put option is zero. Required a. Prepare the entry to adjust the investment to fair value on December 31, 2020. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Debit Credit Dec. 31, 2020 Note Payable Unrealized Gain or Loss OCI = 600 0 0 600 To adjust value of the investment b. Prepare the entry to adjust the put option to fair value on December 31, 2020. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Account Date Debit Credit Dec. 31, 2020 Put Option Unrealized Gain or Loss Income = 12 0 0 12 To adjust value of the put option c. Calculate the net effect on the income statement of holding the put option and the debt securities in 2020. Note: Do not use a negative sign with your answer. Net effect on net income: $ 0