The gain or loss on the early retirement of a bond is the difference between the amount paid to retire the bond and the bond's carrying value at the date of retirement.

Question

Quizplus · Accepted Answer

This is correct. The gain or loss on the early retirement of a bond is calculated as the difference between the amount paid to retire the bond and the bond's carrying value at the date of retirement. If the amount paid to retire the bond is greater than the carrying value, there will be a gain, and if it is less than the carrying value, there will be a loss.

The Gain or Loss on the Early Retirement of a Bond