The difference between the carrying amount and the amount paid to retire the bonds is reported as a gain or loss, depending on the circumstances.

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This statement is true. When bonds are retired before their maturity date, the carrying amount (which includes both the principal amount and any unamortized premium or discount) may not match the amount that the bondholders receive to retire the bonds. The difference between these two amounts is reported as a gain or loss on the income statement. However, the specific circumstances surrounding the bond retirement will determine whether the difference is reported as a gain or loss. For example, if bonds are retired early and the carrying amount is higher than the amount paid to retire the bonds, this would result in a gain. Conversely, if the carrying amount is lower than the amount paid to retire the bonds, this would result in a loss.

The Difference Between the Carrying Amount and the Amount Paid