A
company has bonds outstanding with a par value of $100,000. The
unamortized discount on these bonds is $4,500. The company retired these
bonds by buying them on the open market at 95. What is the gain or loss
on this retirement?
$5,000 gain. | |
$5,000 loss. | |
$0 gain or loss. | |
→ | $500 gain. |
$500 loss. |
Par value | $100,000 |
Unamortized discount | 4,500 |
| |
Carrying value of bonds | $ 95,500 |
Retirement price | 95,000 |
| |
Gain on retirement | $ 500 |
|
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