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nirvana33 [79]
2 years ago
13

In 2005, ABC Company issued $100,000 of 20-year bonds at face value. Ten years later, in 2015, the company retired the bonds ear

ly by purchasing them in the open market at $101,000. The entry to record this transaction includes a:
Business
1 answer:
KiRa [710]2 years ago
3 0

Answer:

b. debit to Loss on Bond Retirement of $1,000.

Explanation:

Options are "<em> A.  credit to Gain on Bond Retirement of $1,000.  B.  debit to Loss on Bond Retirement of $1,000.  C.  debit to Bonds Payable of $101,000.  D.  credit to Cash of $100,000."</em>

<em> </em>

When a bond is retired before maturity a gain or loss may arise. In such case if the price paid to retire the bonds is greater the carrying amount of bonds then the company need to record a loss on retirement in the book. On the other hand if the price paid is less than the carrying amount of the bonds at retirement, then the company records a gain on retirement of bonds.

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Answer:

In the first year 2019, the depreciation expense would be $20,000.

From 2020 to 2023, the depreciation expense would be $40,000 and then $20,000 in 2024.

Explanation:

Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.

It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset

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