Brooks uses the straight-line method of amortization. Brooks Company redeemed the bonds on January 1, 2018
<u>The amount of gain reported by Brooks its 2018 income statement relative to this transaction is </u>$190,800
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Explanation:
We know that the formula for carrying value is
<u> Carrying value
=Face value - Unamortized discount</u>
<u>
Bonds have a face value of $200,000</u>
<u>Brooks Company received proceeds of $188,500</u>
200,000 - 188,500 = 11,500 ( unamortized discount
)
11,500 / 20 = 575 semiannual discount amortization
575 x 4 = 2,300 discount amortized after 4 interest payment periods.
11,500 - 2,300 = 9,200 <u>unamortized discount</u>
200,000 - 9,200 = $190,800<u> (Carrying Value)</u>
<u>The amount of gain reported by Brooks its 2018 income statement relative to this transaction is </u>$190,800
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