When a company retires its bonds, which of the following is the correct reporting on the statement of cash flows?
A)Gain or loss in operating section, amount of cash paid in investing section
B)Gain or loss in financing section, amount of cash received in operating section
C)Gain or loss in operating section, amount of cash paid in financing section
D)Gain or loss in investing section, amount of cash received in operating section

Question

Quizplus · Accepted Answer

When a company retires its bonds, any gain or loss on the retirement is reported in the operating section, as it is not considered an investing or financing activity. The amount of cash paid for the retirement is reported in the financing section, as it relates to the company's financing activities. Therefore, the correct reporting on the statement of cash flows would be a gain or loss in the operating section and the amount of cash paid in the financing section, which is option C.

When a Company Retires Its Bonds, Which of the Following