RequiredIgnore income taxes.a. Assume that Alfa Romeo accounts for this note thr

RequiredIgnore income taxes.a. Assume that Alfa Romeo accounts for this note throughout the three years using its initial present value and the historical interest rate (Approach 1). Using the analytical framework discussed in the chapter indicate the effects of the following events on the balance sheet and income statement.(1) Manufacture of the automobile during 2009.(2) Sale of the automobile on January 1 2010.(3) Cash received and interest revenue recognized on December 31 2010.(4) Cash received and interest revenue recognized on December 31 2011.(5) Cash received and interest revenue recognized on December 31 2012.b. Assume that Alfa Romeo values this note receivable at fair value each year with fair value changes recognized in net income (Approach 3). Changes in market interest rates affect the valuation of the note on the balance sheet immediately and the computation of interest revenue for the next year.(1) Manufacture of the automobile during 2009.(2) Sale of the automobile on January 1 2010.(3) Cash received and interest revenue recognized on December 31 2010.(4) Note receivable revalued and an unrealized holding gain or loss recognized on December 31 2010.(5) Cash received and interest revenue recognized on December 31 2011.(6) Note receivable revalued and an unrealized holding gain or loss recognized on December 31 2011.(7) Cash received and interest revenue recognized on December 31 2012.c. Why is retained earnings on December 31 2012 equal to $18242 in both cases despite having shown a different pattern of income over time?d. Discuss the trade-off in financial reporting when moving from Approach 1 in Part a to Approach 3 in Part b.