A company has bonds outstanding with a par value of $100,000.The unamortized premium on these bonds is $2,700.If the company retired these bonds at a call price of $99,000,the gain or loss on this retirement is:
A)$1,000 gain.
B)$1,000 loss.
C)$2,700 loss.
D)$2,700 gain.
E)$3,700 gain.

Question

Quizplus · Accepted Answer

The gain on retirement is calculated by comparing the call price to the carrying amount of the bonds. The carrying amount is the par value plus the unamortized premium, which is $100,000 + $2,700 = $102,700. The bonds were retired for $99,000, so the gain is $102,700 - $99,000 = $3,700.

A Company Has Bonds Outstanding with a Par Value of $100,000.The