Answer:
$55,200 gain
Explanation:
Calculation to determine How much gain or loss should be recognized on this bond retirement
First step is to determine the Book value on date of sale
Book value on date of sale=$1,200,000+$127,200
Book value on date of sale=$1,327,200
Second step is to calculate the Retired value of bonds
Retired value of bonds =$1,200,000*106
Retired value of bonds=$1,272,000
Now let determine the Gain on bonds retirement
Using this formula
Gain on bond retirement=Book value on date of sale-Retired value of bonds
Let plug in the formula
Gain on bond retirement=$1,327,200-$1,272,000
Gain on bond retirement=$55,200 gain
Therefore the amount of gain that should be recognized on this bond retirement will be $55,200 gain
