EXERCISE 4-2 Patton Company purchased P4,000,000 of 10% bonds of Scott Co. on January 1, 2020, paying P3,849,247. The bonds mature December 31, 2024; interest is payable each July 1 and January 1. The discount of 150,753 provides an effective yield of 1196. Patton Company classifies the debt instrument as financial asset at fair value through profit or loss. The fair value of the bonds at the end of each year follows: December 31, 2020 13,900,000 December 31, 2021 4,100,000 December 31, 2022 4,000,000 1. Determine the carrying amount of the debt instrument at the end of each year from 2020 to 2022. 2. Determine the interest income recognized by Patton on the bonds every year from 2020 to 2022. 3. Determine the gain or loss on change in fair value recognized in Patton's profit or loss statement during each year from 2020 to 2022