On January 2, 2020, Penta Inc.. issued a $92,000, fouryear note at prime plus 1% variable interest, with interest payable semiannually. On the same date, Sheridan entered into an interest rate swap where it agreed to pay 8% fixed and receive prime plus 1% for the first six months on $92,000. At each sixmonth period, the variable rate will be reset. The prime interest rate is 7.7% on January 2, 2020, and is reset to 8.7% on June 30, 2020. On December 31, 2020, the fair value of the swap has increased by $25,000. Sheridan follows ASPE and uses hedge accounting. Assume that the swap qualifies for hedge accounting under ASPE.

Calculate the net interest expense to be reported for this note and the related swap transaction as at June 30 and December 31, 2020. June 30 December 31 The net interest expense to be reported $ $ Prepare the journal entries relating to the interest for the year ended December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Cr (To record payment of interest.) (To record cash received on swap.) (To record payment of interest.) + (To record cash received on swap.) Assume, instead, that Sheridan follows IFRS. Prepare the journal entries for this cash flow hedge. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit December 31, 2020 (To increase the value of the contract.) December 31, 2020 (To record the "fix" under hedge accounting.)