Hay Co. enters into a "receive fixed, pay variable" interest rate swap on July 1, 20x1 for a notional amount of $ 3,000,000. The set rate is 12% equal to the current rate of July 1, 20x1. Cash settlement is due on July 1, 20x3. Information on market rates follows:

July 1, 20x1.............12%
July 1, 20x2.............9%
July 1, 20x3.............13%

Requirements:
a) How much is the derivative asset ( liability) to be presented in Hay's June 30, 20x2 statement of financial position?
b) How much is gain (loss) recognized on the settlement date?

Answer rating: 100% (QA)

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