On January 1, 2022, Adams Corp. issued 10-year, $1,000,000 bonds at par. The bonds make payments annually on December 31 at a stated fixed rate of interest of 8.0%. On January 1, 2022, Adams Corp. also entered into an interest rate swap which is designated as a fair value hedge of the bonds. In this arrangement, Adams Corp. paid variable interest rates to a swap bank and in return, the swap bank paid fixed interest to Adams Corp. Interest rates during the first year of the interest rate swap were the following:

Date	Fixed rate	Market rate
January 1, 2022	8.0%	8.0%
December 31, 2022	8.0%	7.5%

As a result of the change in interest rates, as of December 31, 2022 the bond liability had a fair value of $1,031,894 and the interest rate swap had a fair value of $31,894. Required: 1. At what amount would Adams Corp. report for the bond liability and interest rate swap in its December 31, 2022 balance sheet? 2. What is the net amount of interest expense Adams Corp. would include in its December 31, 2022 income statement for the hedged debt obligation? (Enter all amounts as positive values.)

REQUIRED 2 . What is the net amount of interest expense Adams Corp. would include in its December 31, 2022 income statement for the hedged debt obligation? (Enter all amounts as positive values.)

NET AMOUNT OF INTEREST EXPENSE : ____

Req 1 Reg 2 At what amount would Adams Corp. report for the bond liability and interest rate swap in its December 31, 2022 balance sheet? $ Bonds payable Interest rate swap 1,000,000 31,894 $ Req 1 Req 2 >