A material gain or loss from debt refunding should be
A)recognized over the remaining life of the old issue as ordinary income or loss
B)recognized in the current period as extraordinary income or loss
C)recognized over the life of the new bond issue as extraordinary income or loss
D)recognized in the current period as ordinary income or loss

Question

Quizplus · Accepted Answer

Material gains or losses from debt refunding should be recognized in the current period as ordinary income or loss. This is in accordance with the GAAP principle of matching expenses and revenues with the period in which they were incurred or earned. Extraordinary items are events and transactions that are unusual in nature and infrequent in occurrence, and debt refunding would not typically fit this criteria.

A Material Gain or Loss from Debt Refunding Should Be