Question

Clabber Company has bonds outstanding with a par value of $123,000 and a carrying value of $111,100. If the company calls these bonds at a price of $106,500, the gain or loss on retirement is:

Answer 1

Answer:

The gain on retirement = $4,600

Explanation:

The gain or loss on retirement = Carrying Value of the Bonds -  Call price of the Bonds

The gain or loss on retirement = $111,100 -  $106,500

The gain on retirement = $4,600

Note: Par value will not be taken for the calculation of the above