The Titan retires a $20 million bond issue when the carrying value of the bonds is $18 million,but the market value of the bonds is $23 million.The entry to record the retirement will include:

Question

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The carrying value of the bonds is $18 million, but the market value of the bonds is $23 million, indicating a gain of $5 million. However, since the bonds are being retired at a cost of $20 million, there is a loss of $2 million ($20 million - $18 million). Therefore, the entry to record the retirement will include a debit of $2 million to the bond's carrying amount and a debit of an additional $3 million to a loss account, totaling a debit of $5 million.

The Titan Retires a $20 Million Bond Issue When the Carrying