Prepare the journal entries relating to the interest for the years ended December $31,2023$ and $2024.($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. List all debit

entries before credit entries.$)$

ate

Account Titles and Explanation

Interest Expense

$($To record payment of interest$)$

Interest Expense

$($To record payment on swap$)$

Interest Expense

$[]$

$($To record payment of interest$)$

$1$ Prepare the journal entries to recognize the swap, assuming the company follows hedge accounting under IFRS. $($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.

List all debit entries before credit entries.$)$

$($To decrease the value of the contract$)$

$($To record the "fix" under hedge accounting$)$

$($To increase the value of the contract$)($To decrease the value of the contract$)$

$($To record the "fix" under hedge accounting$)$

L

$($To increase the value of the contract$)$

$$

$($To increase the value of the contract$)$

$($To record the "fix" under hedge accounting$)$

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List of AccountsOn January $2,2023,$ Sunland Corp. issues a $$11-$million, five$-$year note at LIBOR, with interest paid annually. To protect against the

cash flow uncertainty related to interest payments that are based on LIBOR, Sunland entered into an interest rate swap to pay $8\%$

fixed and receive LIBOR based on $$11$ million for the term of the note. The LIBOR rate for the first year is $7\mathrm{.}8\%.$ The LIBOR rate is

reset to $8\mathrm{.}8\%$ on January $2,2024.$ Sunland follows ASPE and uses hedge accounting. On December $31,2023,$ the fair value of the swap

decreased by $$13,500$ : it increased by $$4,000$ on December $31,2024.$ Assume that the criteria for hedge accounting under ASPE are

met.

$($b$)$

Your answer is correct.

Calculate the net interest expense to be reported for this note and related swap transactions as at December $31,2023$ and $2024.$

December $31,2023$

December $31,2024$

The net interest expense to be reported