Clabber Company has bonds outstanding with a par value of $100,000 and a carrying value of $97,300. If the company calls these bonds at a price of $95,000, the gain or loss on retirement is:
A) $2,700 loss.
B) $2,300 loss.
C) $2,300 gain.
D) $5,000 loss.
E) $2,700 gain.

Question

Quizplus · Accepted Answer

The gain on retirement is calculated as the carrying value ($97,300) minus the call price ($95,000), resulting in a $2,300 gain.

Clabber Company Has Bonds Outstanding with a Par Value of $100,000