On March 31, 2016, Bundy Company retired $10,000,000 of bonds, which have an unamortized premium of $500,000, by paying bondholders $9,850,000. What is the amount of the gain or loss on the retirement of the bonds?

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The carrying amount of the bonds is $10,500,000 ($10,000,000 face value + $500,000 unamortized premium). The bonds were retired for $9,850,000, resulting in a gain of $650,000 ($10,500,000 - $9,850,000).

On March 31, 2016, Bundy Company Retired $10,000,000 of Bonds