Question

Chang industries has bonds outstanding with a par value of $220,800 and a carrying value of $234,200. if the company calls these bonds at a price of $227,000, the gain or loss on retirement is:

Answer 1

Gain on retirement of bonds = book value of bond - the amount paid to the bondholders

Gain = $234,200-$227,000 = $7200.

So they will have a gain of $7200.

gain or lose= $227,000-220800= $ 7200