On January 1, 2002, Gonzalez Corporation issued $4,500,000 of 10%, ten-year bonds at 103. The bonds are callable at the option of Gonzalez at 105. On December 31, 2008, when the fair market value of the bonds was 96, Gonzalez repurchased $1,000,000 of the bonds in the open market at 96. The unamortized total premium at the date of repurchase was $40,500. Gonzalez has recorded interest and amortization for 2008. Ignoring income taxes and assuming that the gain is material, Gonzalez should report this reacquisition as

Question

Quizplus · Accepted Answer

$4,540,500 × $1,000,000/$4,500,000 = $1,009,000 (CV of retired bonds) $1,009,000 - ($1,000,000 × .96) = $49,000.

On January 1, 2002, Gonzalez Corporation Issued $4,500,000 of 10