A company has a receive variable/pay fixed interest rate swap that qualifies as an effective hedge of its variable rate debt. When it enters the swap agreement, it records the swap investment at what amount?

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Under accounting standards, when a company enters into a swap agreement that qualifies as an effective hedge, it records the swap on its balance sheet at its fair value, which is the present value of expected future cash flows from the swap, including both receipts and payments. This approach reflects the economic reality of the swap's value to the company at the inception of the agreement.

A Company Has a Receive Variable/pay Fixed Interest Rate Swap