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  3. on january 2, 2018, sloan company issued a 5-year,

On January 2, 2018, Sloan Company issued a 5-year, $8,980,000 note at LIBOR with interest...

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Accounting

On January 2, 2018, Sloan Company issued a 5-year, $8,980,000 note at LIBOR with interest paid annually. The variable rate is reset at the end of each year. The LIBOR rate for the first year is 6.9% Sloan Company decides it prefers fixed-rate financing and wants to lock in a rate of 7%. As a result, Sloan enters into an interest rate swap to pay 7% fixed and receive LIBOR based on $8.98 million. The variable rate is reset to 7.4% on January 2, 2019. Compute the net interest expense to be reported for this note and related swap transactions as of December 31, 2018.

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