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2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000 gain d. 300,000 Ioss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000

2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000 gain d. 300,000 Ioss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000 gain d. 300,000 loss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000
Transcribed Image Text:2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000 gain d. 300,000 loss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000
On December 31, 2020, Tamia Company showed the following balances: 4,000,000 Bonds payable -6% Discount on bonds payable Share premium – issuance Share premium- conversion privilege 500,000 5,000,000 700,000 The interest is payable annually every December 31. The convertible bonds are not converted but fully paid December 31, 2020. On such date, the quoted price of the convertible bonds with conversion option is 105 which is the payment to the bondholders plus interest. However, the quoted price of the bonds without the conversion privilege is 95.
Transcribed Image Text:On December 31, 2020, Tamia Company showed the following balances: 4,000,000 Bonds payable -6% Discount on bonds payable Share premium – issuance Share premium- conversion privilege 500,000 5,000,000 700,000 The interest is payable annually every December 31. The convertible bonds are not converted but fully paid December 31, 2020. On such date, the quoted price of the convertible bonds with conversion option is 105 which is the payment to the bondholders plus interest. However, the quoted price of the bonds without the conversion privilege is 95.
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