Answer:
F Corp.'s gain or loss in 2018 on this early extinguishment of debt was $16,000
Explanation:
According to the given data we can note that the Bond premium at issue is $80,000
Hence, Amortization of premium through July 1, 2016= $80,000/20 = $4,000 per period$
So, 4,000 x 11 periods= $44,000
There is an Unamortized premium July 1, 2018 $36,000 and Face value of $2,000,000
The Book value July 1, 2018= $2,036,000
Therefore, the Call (redemption) price
= $2,000,000 x 1.01= $2,020,000
Therefore, gain or loss in 2018= The Book value July 1, 2018- Call (redemption) price
Gain on extinguishment=$2,036,000
- $2,020,000
= $16,000
