On January 1, 2024, LLB Industries borrowed $212,000 from Trust Bank by Issuing a two-year, 10% note, with interest payable quarterly . LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Its Intent was to hedge the risk that general Interest rates will decline, causing the fair value of its debt to increase. . The agreement called for the compariy to receive payment based on a 10% fixed Interest rate on a notional amount of $212,000 and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly and rates reset at the beginning of each period. Floating (SOFR) settlement rates were 10% at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fair values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below Assume LLB uses the shortcut method.

On January 1, 2024, LLB Industries borrowed $212,000 from Trust Bank by Issuing a two-year, 10% note, with interest payable quarterly . LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Its Intent was to hedge the risk that general Interest rates will decline, causing the fair value of its debt to increase. . The agreement called for the compariy to receive payment based on a 10% fixed Interest rate on a notional amount of $212,000 and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly and rates reset at the beginning of each period. Floating (SOFR) settlement rates were 10% at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fair values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below Assume LLB uses the shortcut method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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