On January 1, 2022, Katniss Company borrowed P5,000,000 on a 10% three-year interest-bearing note. The net proceeds from the borrowing amounted to P5,000,000. Interest is payable annually every December 31. note The entity elected the fair value option in measuring the payable. On December 31, 2022 and 2023, the risk factors indicated that the rate of interest applicable to the note was 8% and 12% respectively. PV of 1 8% 4 periods PV of an ordinary annuity of 1 8% 4 periods PV of 1 12% 3 periods PV of an ordinary annuity of 1 12% 3 periods 1. What amount should be reported as interest expense for 2022? a. 533,100 b. 500,000 c. 250,000 d. 600,000 2. What amount should be reported as gain or loss from change in fair value for 2022? a. 400,000 gain b. 400,000 loss c. 331,000 loss d. 331,000 gain 0.735 3.312 0.712 2.402 3. What amount should be reported as gain or loss from change in fair value for 2023? a. 570,000 gain b. 570,000 loss c. 239,000 gain d. 239,000 loss 4. Prepare journal entries for 2022 and 2023.