E17-21B (Fair Value Option) Presented below is selected information related to the financial instruments of Kirkland Company at December 31, 2014. This is Kirkland Company’s first year of operations. Carrying Fair Value Amount (at December 31) Investment

E17-21B (Fair Value Option) Presented below is selected information related to the financial instruments of Kirkland Company at December 31, 2014. This is Kirkland Company’s first year of operations.
                                                                                                                               Carrying                     Fair Value
                                                                                                                                Amount               (at December 31)
Investment in debt securities (intent is to hold to maturity)                     $ 60,000                      $ 59,000
Investment in Olive Company stock                                                              400,000                       430,000
Bonds payable                                                                                                   500,000                      490,000
Instructions
(a) Kirkland elects to use the fair value option whenever possible. Assuming that Kirkland’s net income is $360,000 in 2014 before reporting any securities gains or losses, determine Kirkland’s net income for 2014.
(b) Record the journal entry, if any, necessary at December 31, 2014, to record the fair value option for the bonds payable.