EFFECTS ON BALANCES Swap Notes 1,000,000 Jan. 1, 2013 9,363 9,363 June 30, 2013 252 252 Dec. 31, 2013 9,615 9,615 June 30, 2014 1,000,000 _______________ _______________ 0 0 Income Statement () (50,000) Interest expense fixed payment June 30, 2013 – 5,000 Interest expense net cash settlement – 9,363 Holding gain interest rate swap – (9,363) Holding loss hedged note – (45,000) Net effect same as floating interest payment – (50,000) Interest expense fixed payment Dec. 31, 2013 – 10,000 Interest expense net cash settlement – 252 Holding gain - interest rate swap (252) Holding loss hedged note – (40,000) Net effect same as floating interest payment – (50,000) Interest expense fixed payment June 30, 2014 – 5,000 Interest expense net cash settlement – 9,615 Holding loss - interest rate swap (9,615) Holding gain hedged note – (45,000) Net effect same as floating interest payment – Illustration A-1 TA-8 (continued)
EFFECTS ON BALANCES Swap Notes Jan. 1, 2013 1,000,000 June 30, 2013 9,363 9,363 Dec. 31, 2013 252 252 June 30, 2014 9,615 9,615 1,000,000 _______________ _______________ 0 0 Income Statement () June 30, 2013 (50,000) Interest expense – fixed payment 5,000 Interest expense – net cash settlement 9,363 Holding gain – interest rate swap (9,363) Holding loss – hedged note (45,000) Net effect – same as floating interest payment Dec. 31, 2013 (50,000) Interest expense – fixed payment 10,000 Interest expense – net cash settlement 252 Holding gain - interest rate swap (252) Holding loss – hedged note (40,000) Net effect – same as floating interest payment June 30, 2014 (50,000) Interest expense – fixed payment 5,000 Interest expense – net cash settlement 9,615 Holding loss - interest rate swap (9,615) Holding gain – hedged note (45,000) Net effect – same as floating interest payment Illustration A-1 TA-8 (continued)