Question 5. (11 MARKS) On June 30, 2015, Ronaldo Corporation (RC) borrows $10 million with a fixed maturity (no prepayment option) of June 30, 2018, carrying interest at prime + 2%. Interest only is due annually. On the same date, RC enters into a swap arrangement, calling for fixed payments at 7% and receipt of prime + 2%, on a notional amount of $10 million. At that date, prime is at 5% and there is no premium due on the swap arrangement. The swap arrangement qualifies as a cash-flow hedge. socI pay 71 eventuary Additional info: Reset Date Prime rate Fair Value of Swap (liability) asset June 30, 2016 6% $178,326 June 30, 2017 3% $(190,476) The company Required: Record the journal entries related to the swap and for the note payable for RC as it qualifies for hedge accounting. Do this for all years. year-end occurs every June 30. Question 5. (11 MARKS) On June 30, 2015, Ronaldo Corporation (RC) borrows $10 million with a fixed maturity (no prepayment option) of June 30, 2018, carrying interest at prime + 2%. Interest only is due annually. On the same date, RC enters into a swap arrangement, calling for fixed payments at 7% and receipt of prime + 2%, on a notional amount of $10 million. At that date, prime is at 5% and there is no premium due on the swap arrangement. The swap arrangement qualifies as a cash-flow hedge. socI pay 71 eventuary Additional info: Reset Date Prime rate Fair Value of Swap (liability) asset June 30, 2016 6% $178,326 June 30, 2017 3% $(190,476) The company Required: Record the journal entries related to the swap and for the note payable for RC as it qualifies for hedge accounting. Do this for all years. year-end occurs every June 30