On its December 31, 2014 statement of financial position, Codfish Ltd.reported bonds payable of $1,000,000.The bonds had been issued at par.On January 2, 2015, Codfish retired one half of the outstanding bonds at 103 plus a call premium of $35,000.Ignoring income taxes, what amount should Codfish report on its 2015 income statement as loss on extinguishment of debt?

Question

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Codfish retired $500,000 of bonds at 103% of par, which is $515,000. The call premium is $35,000. The total cost to retire the bonds is $550,000. The loss is the difference between the retirement cost and the par value of the bonds retired: $550,000 - $500,000 = $50,000.

On Its December 31, 2014 Statement of Financial Position, Codfish