Chang Company retired bonds with a face amount of ¥150,000,000 at 98 when the carrying value of the bond was ¥149,450,000. The entry to record the retirement would include a
A) gain on bond redemption of ¥2,450,000.
B) loss on bond redemption of ¥550,000.
C) loss on bond redemption of ¥3,000,000.
D) gain on bond redemption of ¥3,550,000.

Question

Quizplus · Accepted Answer

The bonds were retired at 98% of their face value, which is ¥147,000,000 (¥150,000,000 x 0.98). The carrying value was ¥149,450,000. The difference between the carrying value and the retirement amount is a gain of ¥2,450,000 (¥149,450,000 - ¥147,000,000).

Chang Company Retired Bonds with a Face Amount of ¥150,000,000