On March 31, 2014, Bundy Corporation retired $10,000,000 of bonds, which have an unamortized premium of $500,000, by paying bondholders $9,850,000. How much was the gain or loss on the retirement of the bonds?
A) $150,000 loss.
B) $150,000 gain.
C)$650,000 gain.
D)$350,000 loss.

Question

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The carrying amount of the bonds is $10,500,000 ($10,000,000 face value + $500,000 unamortized premium). Bundy Corporation paid $9,850,000 to retire the bonds, resulting in a gain of $650,000 ($10,500,000 - $9,850,000).

On March 31, 2014, Bundy Corporation Retired $10,000,000 of Bonds