Pinoy Company, a Philippine entity, delivers goods to a foreign buyer foron December 1, 2016. Payment is due on March 1, 2017. Pinoy enters into a forward contract to mitigate the probability of huge losses in foreign currency. It was designated as a fair value hedge. Pinoy's incremental borrowing rate is 12% per year

Other relevant data regarding spot and forward rates follow:

DateSpot rateForward Rates

Sales forwardPurchase forward

12/01/16P0.320P0.305P0.333 to 3/01/17

12/31/16P0.330P0.316P0.340 to 3/01/17

3/01/17P0.300P0.300P0.300 Expiry

Calculate the hedging cost recognized by Pinoy in 2016?

a.P15,000

b.P10,000

c.P783

d.P5,000

If designated as a cash-flow hedge instead, and hedge accounting is applied, the hedging cost recognized by Pinoy in 2017 would be

a.P5,000

b.P14,217

c.P10,000

d.P15,000