On May 1, 2020, a state university issued $6,000,000 in variable rate debt, with interest paid on April 30 of each year, the state's fiscal year-end. The rate is reset annually. The state reports the activities of the state university in an enterprise fund. The variable rate for fiscal 2021 is 3%. On the same date, the state enters a receive variable/pay fixed interest rate swap, where the state pays a 3.2% fixed rate to a counterparty. By the end of fiscal 2021, the variable rate has risen to 3.3% and the swap has increased in value by $100,000. The swap qualifies for hedge accounting, per SGAS 53.
Required
a. Prepare the journal entries necessary to record the above events in the state's enterprise fund for fiscal 2021.
b. Assume that on May 1, 2021, it is determined that the swap no longer qualifies for hedge accounting. Prepare the appropriate journal entry.

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The Answer of On May 1, 2020, a state university issued $6,000,000 in variable rate debt, with interest paid on April 30 of each year, the state's fiscal year-end. The rate is reset annually. The state reports the activities of the state university in an enterprise fund. The variable rate for fiscal 2021 is 3%. On the same date, the state enters a receive variable/pay fixed interest rate swap, where the state pays a 3.2% fixed rate to a counterparty. By the end of fiscal 2021, the variable rate has risen to 3.3% and the swap has increased in value by $100,000. The swap qualifies for hedge accounting, per SGAS 53.
Required
a. Prepare the journal entries necessary to record the above events in the state's enterprise fund for fiscal 2021.
b. Assume that on May 1, 2021, it is determined that the swap no longer qualifies for hedge accounting. Prepare the appropriate journal entry.

On May 1, 2020, a State University Issued $6,000,000 in Variable