Required Information On January 1, 2024, Avalanche Corporation borrowed $126,000 from First Bank by Issulng a two-year, 8% fixed-rate note with annual Interest payments. The principal of the note is due on December 31, 2025. - Avalanche wanted to hedge agalnst declines in general Interest rates, so It also entered Into a two-year SOFR-based Interest rate swap agreement on January 1, 2024, and designates it as a falr value hedge. Because the swap is entered at market rates, the falr value of the swap is zero at Inception. - The agreement called for the company to recelve fixed Interest at the current SOFR swap rate of 5% and pay floating Interest tled to SOFR. This arrangement results in an effectlve varlable rate on the note of SOFR +3%. - The contract specifies that the floating rate resets each year on June 30 and December 31 for the net settlement that is due the following perlod. In other words, the net cash settlement Is calculated using beginning-of-perlod rates. The SOFR rates on the swap reset dates and the falr values of the swap obtalned from a derlvatives dealer are as follows: Avalanche meets all criterla for hedge accounting using the shortcut method. Calculate the net effect on earnings of the hedging arrangement for the slx-month perlods ending June 30 and December 31, 2024, d June 30 and December 31, 2025. ote: Inclcate negatlve amounts with a minus sign