Sunset Inc.decided to repurchase an outstanding bond issue by buying it back in the open market.The face value of the bonds was $1,000,000; they were originally issued at $914,698 and currently had a book value of $976,770 and a market value of $954,202.The gain or loss that Sunset will record on the retirement is closest to:

Question

Quizplus · Accepted Answer

The gain or loss on bond retirement is calculated as the difference between the book value of the bonds and the amount paid to repurchase them. In this case, the book value is $976,770 and the repurchase amount (market value) is $954,202. Therefore, the gain is $976,770 - $954,202 = $22,568.