1 On January 1, 2020, TT Corporation invested in Inci Inc.'s two-year, 109% notes, with interest receivable quarterly. TT entered into a two-year interestrate swap agreement on January 1, 2020 and designated the swap as a fair value hedge. The agreement called TT to make payment based on a 10%fixed interest rate on a notional amount of $200,000 and to receive interest based on a floating interest rate. The contract called for cashsettlement of the net interest amount quarterly. Floating (LIBOR) settlement rates were 10% at January 1, 8% at March 31, and 6% June 30, 2020.The fair values of the investment in notes and swap agreement are as follows:January 1March 31June 30Fair value of interest rate swapFair value of the investment in notes$6,200$206,200$12,000$212,000$200,000What will TT record on June 30?O a. $5,800 as debit to Swap accountO b. $5,800 as credit to Swap accountO c. $12,000 as credit to Swap accountO d. $12,000 as debit to Swap accountO e. No entry to Swap account628 P

The given question is related to the interest rate swap. An interest rate swap is known as a forward…

Answered: On january 1, 2020, TT Corporation…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 30P

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