A corporation recognizes a gain or loss
A) only when bonds are converted into common stock.
B) only when bonds are redeemed before maturity.
C) when bonds are redeemed at or before maturity.
D) when bonds are converted into common stock and when they are redeemed before maturity.

Question

Quizplus · Accepted Answer

A corporation recognizes a gain or loss when bonds are redeemed before maturity because the redemption price may differ from the carrying amount of the bonds, leading to a financial impact that needs to be recorded.

A Corporation Recognizes a Gain or Loss