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  • Fair Value Hedge Sarazan Company Issues A 4 Year 7 5 Fixed Rat PDF

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    Anbu jaromia
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    Sarazan Company issued a 4-year, 7.5% fixed-rate note payable and entered into an interest rate swap to receive a fixed rate of 7.5% and pay a variable rate. At year-end 2011, interest rates had declined, so Sarazan received a $13,000 adjustment for the swap settlement and the debt had declined in value by $48,000 while the swap contract increased by $48,000.

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    Sarazan Company issued a 4-year, 7.5% fixed-rate note payable and entered into an interest rate swap to receive a fixed rate of 7.5% and pay a variable rate. At year-end 2011, interest rates had declined, so Sarazan received a $13,000 adjustment for the swap settlement and the debt had declined in value by $48,000 while the swap contract increased by $48,000.

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    27 views1 page

    Fair Value Hedge Sarazan Company Issues A 4 Year 7 5 Fixed Rat PDF

    Uploaded by

    Anbu jaromia
    Sarazan Company issued a 4-year, 7.5% fixed-rate note payable and entered into an interest rate swap to receive a fixed rate of 7.5% and pay a variable rate. At year-end 2011, interest rates had declined, so Sarazan received a $13,000 adjustment for the swap settlement and the debt had declined in value by $48,000 while the swap contract increased by $48,000.

    Copyright:

    © All Rights Reserved
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    Fair Value Hedge Sarazan Company issues a 4 year 7 5

    fixed rat
    Fair Value Hedge Sarazan Company issues a 4-year, 7.5% fixed-rate interest only, non-
    prepayable $1,000,000 note payable on December 31, 2010. It decides to change the interest
    rate from a fixed rate to variable rate and enters into a swap agreement with M&S Corp. The
    swap agreement specifies that Sarazan will receive a fixed rate at 7.5% and pay variable with
    settlement dates that match the interest payments on the debt. Assume that interest rates have
    declined during 2011 and that Sarazan received $13,000 as an adjustment to interest expense
    for the settlement at December 31, 2011. The loss related to the debt (due to interest rate
    changes) was $48,000. The value of the swap contract increased $48,000. (a) Prepare the
    journal entry to record the payment of interest expense on December 31, 2011.(b) Prepare the
    journal entry to record the receipt of the swap settlement on December 31, 2011.(c) Prepare the
    journal entry to record the change in the fair value of the swap contract on December 31,
    2011.(d) Prepare the journal entry to record the change in the fair value of the debt on
    December 31, 2011.View Solution:
    Fair Value Hedge Sarazan Company issues a 4 year 7 5 fixed rat
    SOLUTION-- http://accountinginn.online/downloads/fair-value-hedge-sarazan-company-issues-
    a-4-year-7-5-fixed-rat/

    For Solutions Visit accountinginn.online


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