On January 2, 2020, Sheridan Corp. issues a $12million, fiveyear note at LIBOR, with interest paid annually. To protect against the cash flow uncertainty related to interest payments that are based on LIBOR, Sheridan entered into an interest rate swap to pay 4% fixed and receive LIBOR based on $12 million for the term of the note. The LIBOR rate for the first year is 3.5%. The LIBOR rate is reset to 4.9% on January 2, 2021. Sheridan follows ASPE and uses hedge accounting. On December 31, 2020, the fair value of the swap decreased by $13,500: it increased by $4,000 on December 31, 2021. Assume that the criteria for hedge accounting under ASPE are met.

1. Prepare the journal entries relating to the interest for the years ended December 31, 2020, and 2021.

2. Prepare the Journal entries to recognize the swap, assuming the company for hedge accounting under IFRS.