On January 1,2011,F Corp.issued 2,000 of its 10%,$1,000 bonds for $2,080,000.These bonds were to mature on January 1,2021,but were callable at 101 any time after December 31,2014.Interest was payable semiannually on July 1 and January 1.On July 1,2016,F called all of the bonds and retired them.The bond premium was amortized on a straight-line basis.Before income taxes,F Corp.'s gain or loss in 2016 on this early extinguishment of debt was:

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The bonds were issued at a premium of $80,000 ($2,080,000 - $2,000,000). This premium is amortized over 10 years, resulting in $8,000 amortized per year. By July 1, 2016, 5.5 years of amortization would have occurred, totaling $44,000. The unamortized premium is $36,000 ($80,000 - $44,000). The call price is $2,020,000 (101% of $2,000,000). The carrying amount of the bonds is $2,036,000 ($2,000,000 + $36,000). The gain on extinguishment is $16,000 ($2,036,000 - $2,020,000).