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Knowledge Check 01 On January 1, Year 1, Mega Corporation issues $100,000 of 8% bonds maturing in 10 years, when the market rate of interest is 9%. Market interest rates drop to 6% by December 31, Year 2. The company retires the bonds on December 31, Year 2 by paying $112,561. The carrying value of the bonds as of this date is $94,383. Retirement of the bonds results in a: Multiple Choice Loss of $18,178 Gain of $12,561 Gain of $18,178 Loss of $12,561

Knowledge Check 01 On January 1, Year 1, Mega Corporation issues $100,000 of 8% bonds maturing in 10 years, when the market rate of interest is 9%. Market interest rates drop to 6% by December 31, Year 2. The company retires the bonds on December 31, Year 2 by paying $112,561. The carrying value of the bonds as of this date is $94,383. Retirement of the bonds results in a: Multiple Choice Loss of $18,178 Gain of $12,561 Gain of $18,178 Loss of $12,561

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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Knowledge Check 01 On January 1, Year 1, Mega Corporation issues $100,000 of 8% bonds maturing in 10 years, when the market rate of interest is 9%. Market interest rates drop to 6% by December 31, Year 2. The company retires the bonds on December 31, Year 2 by paying $112,561. The carrying value of the bonds as of this date is $94,383. Retirement of the bonds results in a: Multiple Choice Loss of $18,178 Gain of $12,561 Gain of $18,178 Loss of $12,561
Transcribed Image Text:Knowledge Check 01 On January 1, Year 1, Mega Corporation issues $100,000 of 8% bonds maturing in 10 years, when the market rate of interest is 9%. Market interest rates drop to 6% by December 31, Year 2. The company retires the bonds on December 31, Year 2 by paying $112,561. The carrying value of the bonds as of this date is $94,383. Retirement of the bonds results in a: Multiple Choice Loss of $18,178 Gain of $12,561 Gain of $18,178 Loss of $12,561
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