A company retired $500,000 of bonds,which have an unamortized discount of $10,000,by repurchasing them for $500,000.What is the amount of the gain or loss on the retirement of the bonds?
A)There was no gain or loss.
B)There was a $10,000 loss.
C)There was a $10,000 gain.
D)There was a $500,000 loss.

Question

Quizplus · Accepted Answer

The bonds were retired for their face value of $500,000, but they had an unamortized discount of $10,000, effectively making their book value $490,000 ($500,000 - $10,000). Repurchasing them for $500,000 results in a $10,000 loss because the company paid $10,000 more than the book value.

A Company Retired $500,000 of Bonds,which Have an Unamortized Discount