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kykrilka [37]
2 years ago
5

On January 1, 2013, Goll Corp. issued 3,000 of its 10%, $1,000 bonds for $3,120,000. These bonds were to mature on January 1, 20

23 but were callable at 101 any time after December 31, 2016. Interest was payable semiannually on July 1 and January 1. On July 1, 2018, Goll called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Goll's gain or loss in 2018 on this early extinguishment of debt was Group of answer choices $30,000 loss. $24,000 gain. $90,000 gain. $36,000 gain.
Business
1 answer:
LiRa [457]2 years ago
4 0

Answer:

$24,000 Gain

Explanation:

Given that,

Bonds issued = 3,000

Par value = $1,000

Value of issued bonds = $3,120,000

Goll's gain in 2018 on this early extinguishment of debt:

= Issue price of bonds - Premium amortized - Callable value

= $3,120,000 - [($3,120,000 - $3,000,000) × 11/20] - (3,000 × $1,000 × 1.01)

= $3,120,000 - $66,000 - $3,030,000

= $24,000 Gain

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