When bonds are retired before their maturity date:

Question

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When bonds are retired before their maturity date, the issuing company will report a non-operating gain or loss, depending on whether the amount paid to retire the bond was greater or smaller than the carrying amount (which is the face value of the bond minus any unamortized discount or plus any unamortized premium). This will be reported on the income statement as a non-operating gain or loss. GAAP is not violated by retiring bonds before their maturity date as long as the company complies with the terms of the bond contract (which might include payment of a call premium or other penalties).

When Bonds Are Retired Before Their Maturity Date