Question

A bond with a face value of $100,000 is retired at 96. There is still a...

A bond with a face value of $100,000 is retired at 96. There is still a balance in Discount on Bonds Payable of $1,200.
What is the gain or loss on the retirement of the bond?

Homework Answers

Answer #1
Step-1:Calculation of carrying amount of bond
Face value $       1,00,000
Less unamortized discount on bonds payable $             1,200
Carrying Value $           98,800
Step-2:Calculation of gain on retirement of bonds
Bonds liability a $           98,800
Retirement price b $           96,000
Gain on retirement of the bond a-b $             2,800
Retirement price is the less than liability.So, there is gain on retirement.
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