On January 1, 2020, Iniesta Corporation invested in Kasaba Inc.’s two-year, 10% notes, with interest receivable quarterly. Iniesta entered into a two-year interest rate swap agreement on January 1, 2020 and designated the swap as a fair value hedge. The agreement called Iniesta 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 cash settlement 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 1 March 31 June 30Fair value of interest rate swap 0 $6,200 $12,000 Fair value of the investment in notes $200,000 $206,200 $212,000What is Iniesta’s net cash settlement at June 30 and how will it be recorded?
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On January 1, 2020, Iniesta Corporation invested in Kasaba Inc.’s two-year, 10% notes, with interest...
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