In 2013, Game Co. took advantage of market conditions to refund its outstanding debt. Game should report the excess of the carrying amount of the old debt over the amount paid to extinguish it as a(n)
A) deferred credit to be amortized over life of new debt
B) part of continuing operations
C) extraordinary item, net of income taxes
D) prior period adjustment

Question

Quizplus · Accepted Answer

According to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 470-50-40-6, the excess of the carrying amount of the old debt over the amount paid to extinguish it should be recognized as a gain on extinguishment of debt and reported as part of continuing operations in the income statement. Therefore, the correct choice is B.