A gain is earned when retiring bonds before their maturity date is recognized by
A) amortizing it over the remaining life of the bond.
B) making a prior period adjustment.
C) reporting it as an extraordinary item in the year of retirement.
D) reporting it as an ordinary item in the year of retirement.

Question

Quizplus · Accepted Answer

Gains or losses from retiring bonds before their maturity date are recognized in the income statement as ordinary items in the year of retirement. This treatment aligns with the principle that such gains or losses are part of the entity's regular operations and financial performance for that period.

A Gain Is Earned When Retiring Bonds Before Their Maturity