On October 1, 2016, Philippines took delivery from Ohio, USA firm of inventory costing$1,425,000. Payment is due onJanuary 30, 2017.

Concurrently, Philippines paid an amount of cash to acquire an at-the-money call option for$1,425,000.

The option premium paid isP19,625.

The spot price at the inception date isP44.40.

The spot price at the statement of financial date isP44,423.

The effective porting of the option contract on January 30, 2017 amounts toP38,475.

The gain on the derivative instrument on January 30, 2017using nonsplit accountingamounts toP3,225.

1.)What is thegain/(loss) on hedging instrumentdue to change in theineffective portionon December 31, 2016?

a.17,150

b.5,700

c.(17,150)

d.(5,700)

2.)What is thegain (loss) on hedging instrumentdue to change in theeffective portionon December 31, 2017?

a.5,700

b.(5,700)

c.3,225

d.(3.225)