MSG Corporation issued $100,000 of 3-year, 6% bonds outstanding on December 31, 2017 for $106,000. The bonds pay interest annually and MSG uses straight-line amortization. On May 1, 2018, $10,000 of the bonds were retired at 112. As a result of the retirement, MSG will report:

Question

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First, the premium must be amortized through May 1. Using the straight-line method, the annual amount is 1/3 of the three-year bond term and the portion of the current year to the date of retirement is 4 months = 4/12. The face value portion of bonds being retired is $10,000/$100,000 = 10%. 11ea937b_35f4_d73b_a419_b35a86684b6f_TB2599_00

MSG Corporation Issued $100,000 of 3-Year, 6% Bonds Outstanding on December