Question

At December 31, 2018 the following balances existed on the books of Ian Corporation: Bonds Payable$4,000,000...

At December 31, 2018 the following balances existed on the books of Ian Corporation: Bonds Payable$4,000,000 Premium on Bonds Payable300,000 Unamortized Bond Issue Costs200,000 If the bonds are retired on January 1, 2015, at 100, what will Ian report as a loss or gain on redemption?

$500,000 Gain

$500,000 Loss

$100,000 Gain

$100,000 Loss

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Homework Answers

Answer #1

Correct answer----$100,000 Loss

Bonds payable

$ 40,00,000.00

Premium

$ (3,00,000.00)

Net bond value

$ 37,00,000.00

Add: Unamortized bond issue expenses

$    2,00,000.00

                    Net cost of bond to company

$ 39,00,000.00

Sale value (4000000/100*100)

$ 40,00,000.00

Loss on redemption

$    1,00,000.00
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