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On January 1 , 2 0 2 4 , LLB Industries borrowed $ 2 1 6 , 0 0 0 from Trust Bank by issuing
On January LLB Industries borrowed $ from Trust Bank by issuing a twoyear, note, with interest payable quarterly.
LLB entered into a twoyear interest rate swap agreement on January 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 company to receive payment based on a fixed interest rate on a notional amount of $ 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 at January at March and at June and September 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.
Fair value of interest rate swap
Fair value of note payable
tableJanuary March June September $$$$
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