Suppose the fixed rate debt changed in value by \($80,000\) as of June 30, 2016. How does Sunny record this change in value?

Sunny Corporation has \($1,000,000\) in fixed rate debt, with an annual interest rate of 4%, 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 3.8%. On June 30, 2016, LIBOR declines to 3.5% and causes the variable rate to be reset at that time. The swap qualifies for hedge accounting.

a. Gain reported in income

b. Loss reported in income

c. Loss reported in OCI

d. Not recorded