Sunland Company commonly issues long-term notes payable to its various lenders. Sunland has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Sunland has elected to use the fair value option for the long-term notes issued to Barclays Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates, not credit risk.

		Carrying Value		Fair Value
December 31, 2020		$51,800		$51,800
December 31, 2021		42,100		40,600
December 31, 2022		36,300		38,300

(a) Prepare the journal entry at December 31 (Sunlands year-end) for 2020, 2021, and 2022, to record the fair value option for these notes.

(b) At what amount will the note be reported on Sunlands 2021 balance sheet?

(c) What is the effect of recording the fair value option on these notes on Sunlands 2022 income?