A Company Has Variable Rate Debt

Multiple Choice

A company has variable rate debt. It swaps the variable payments for fixed payments. If interest rates increase during the year:

A) The loss on the swap and the gain on the fixed rate debt are reported in income.
B) The gain on the swap and the loss on the fixed rate debt are reported in income.
C) The gain on the swap is reported in other comprehensive income.
D) The loss on the swap is reported in other comprehensive income.