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O Dec. 31, 2019, a US Company had $500,000,6% fixed-rate note outstanding, payable in 2 years. On the same date, the company decides to enter
O Dec. 31, 2019, a US Company had $500,000,6% fixed-rate note outstanding, payable in 2 years. On the same date, the company decides to enter into a 2-year swap with a local bank to convert the fixed-rate debt to variable-rate debt. The terms of the swap indicate that the company will receive interest at a fixed rate of 6.0% and will pay a variable rate equal to the 6-month LIBOR (London Interbank Offer rate). The LIBOR rate will be reset every 6 months and will be used to determine the variable rate to be paid for the following 6-month period. The 6-month LIBOR rate and the swap and debt fair values are as follows: Instructure: 1- Compute the net interest expense to be reported for this note and related swap transaction as of June 30,2020 2- Indicate the item(s) and amount(s) that should be reported on the statement of financial position and income statement related to the debt and swap on Decem 31,2020
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