To calculate the gain or loss on the retirement of bonds, the carrying value of the bonds is subtracted from the repurchase price.

Question

Quizplus · Accepted Answer

This is a correct statement. The gain or loss on the retirement of bonds is calculated by subtracting the carrying value of the bonds from the repurchase price. The carrying value is the book value of the bonds that appears in the balance sheet, and the repurchase price is the amount paid to redeem the bonds. If the repurchase price is higher than the carrying value, a gain is recognized, and if it is lower, a loss is recognized.

To Calculate the Gain or Loss on the Retirement of Bonds