This paper circulates around the core theme of Akshaya Ltd. has given a 12.50% fixed rate loan to its subsidiary Shaya Ltd together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Akshaya Ltd. has given a 12.50% fixed rate loan to its subsidiary Shaya Ltd. Akshaya Ltd. measures this loan at an amortized cost of Rs. 2,50,000. Akshaya Ltd. has plan to hive off the receivable at a later stage and as a measure to safeguard against fall in value of its dues enter into a pay fixed, receive floating interest rate swap to convert the fixed interest receipts. Akshaya Ltd. designates the swap as a hedging instrument in a fair value hedge of the loan asset.
over the following months, market interest rate increased and Akshaya Ltd. earns interest income of rs. 25,000 on the loan and Rs. 1,000 as net interest payment on the swap. The fair value of the loan asset decreases by Rs. 5,000 while that of the interest rate swap increases by Rs. 5,000.
You are informed that all conditions required for the hedge accounting are satisfied. You are required to pass journal entries, with suitable narrations, in the book of Akshaya Ltd. to record the above transaction.
