A company has bonds outstanding with a face value of $100,000.The unamortized premium on these bonds is $2,700.If the company retired these bonds at a call price of 99.How much would be the gain or loss?
A)$2,700 Gain
B)$3,700 Gain
C)$3,700 Loss
D)$2,700 Loss

Question

Quizplus · Accepted Answer

The carrying value of the bonds is $102,700 ($100,000 face value + $2,700 unamortized premium). The call price is 99% of $100,000, which is $99,000. The gain is the difference between the carrying value and the call price: $102,700 - $99,000 = $3,700 gain.

A Company Has Bonds Outstanding with a Face Value of $100,000.The