A company has bonds outstanding with a par value of $600,000.The unamortized discount on these bonds is $3,000.The company retired these bonds by buying them on the open market at 98.What is the gain or loss on this retirement?
A)$0 gain or loss
B)$9,000 gain
C)$9,000 loss
D)$14,500 gain
E)$14,500 loss

Question

Quizplus · Accepted Answer

The bonds were retired at 98% of par value, which is $588,000 ($600,000 x 0.98). The book value of the bonds is $597,000 ($600,000 - $3,000). The gain on retirement is the difference between the book value and the repurchase price: $597,000 - $588,000 = $9,000 gain.

A Company Has Bonds Outstanding with a Par Value of $600,000.The