1. Prepare the necessary entries to record the activities related to the debt and the hedge from
July 1, 2012, through June 30, 2014.
2. Prepare a schedule to evaluate the positive or negative impact the hedge had on each 6-month period of earnings.
3. What would the LIBOR rate on December 31, 2013, have had to be in order for the interest expense to be the same whether or not there was a cash flow hedge?