On January 1, 2017, Halibut Corp.issued $1,000,000, 10% bonds for $1,040,000.These bonds were to mature on January 1, 2027 but were callable at 101 any time after December 31, 2017.Interest was payable semi-annually on July 1 and January 1.On July 1, 2022, Halibut called all of the bonds and retired them.Bond premium was amortized on a straight-line basis.Ignoring income taxes, Halibut's gain or loss in 2022 on this early extinguishment of debt was

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The bonds were issued at a premium of $40,000 ($1,040,000 - $1,000,000). Over the 10-year life of the bonds, the premium is amortized at $4,000 per year ($40,000 / 10 years). By July 1, 2022, 5.5 years of amortization would have occurred, totaling $22,000 ($4,000 * 5.5). The unamortized premium is $18,000 ($40,000 - $22,000). The call price is $1,010,000 (101% of $1,000,000). The carrying amount of the bonds is $1,018,000 ($1,000,000 + $18,000). The gain on extinguishment is $8,000 ($1,018,000 - $1,010,000).