Sunny Corporation has $3,000,000 in fixed-rate debt, with an annual interest rate of 3.5%, and interest payments due June 30 and December 31 of each year. On January 1, 2016, it entered a receive fixed/pay variable interest rate swap, where the variable rate is LIBOR. On January 1, 2016, LIBOR is 3.3%. On June 30, 2016, LIBOR declines to 3.0% and causes the variable rate to be reset at that time. The swap qualifies for hedge accounting. How much does Sunny pay or receive to settle the swap for the the6- month period ending June 30, 2016? a) $3,000 paid b) $52,500 received c) $49,500 paid d) $3,000 received

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sunny corporation this question solution general accounting

Sunny Corporation has $3,000,000 in fixed-rate debt, with an annual
interest rate of 3.5%, and interest payments due June 30 and December
31 of each year. On January 1, 2016, it entered a receive fixed/pay
variable interest rate swap, where the variable rate is LIBOR. On January
1, 2016, LIBOR is 3.3%. On June 30, 2016, LIBOR declines to 3.0% and
causes the variable rate to be reset at that time. The swap qualifies for
hedge accounting.
How much does Sunny pay or receive to settle the swap for the the6-
month period ending June 30, 2016?
a) $3,000 paid
b) $52,500 received
c) $49,500 paid
d) $3,000 received
Transcribed Image Text:Sunny Corporation has $3,000,000 in fixed-rate debt, with an annual interest rate of 3.5%, and interest payments due June 30 and December 31 of each year. On January 1, 2016, it entered a receive fixed/pay variable interest rate swap, where the variable rate is LIBOR. On January 1, 2016, LIBOR is 3.3%. On June 30, 2016, LIBOR declines to 3.0% and causes the variable rate to be reset at that time. The swap qualifies for hedge accounting. How much does Sunny pay or receive to settle the swap for the the6- month period ending June 30, 2016? a) $3,000 paid b) $52,500 received c) $49,500 paid d) $3,000 received
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