January 1, 2016, F Corp. issued 2,000 of its 10%, $1,000 bonds for $2,080,000. These bonds were to mature on January 1, 2026, but were callable at 101 any time after December 31, 2019. Interest was payable semiannually on July 1 and January 1. On July 1, 2021, F called all of the bonds and retired them. The bond premium was amortized on a straight-line basis. Assume that there was a bond issue cost of $100,000 and it was amortized on a straight line basis. Before income taxes, F Corp.'s gain or loss in 2021 on this early extinguishment of debt was:
n January 1, 2016, F Corp. issued 2,000 of its 10%, $1,000 bonds for $2,080,000. These bonds were to mature on January 1, 2026, but were callable at 101 any time after December 31, 2019. Interest was payable semiannually on July 1 and January 1. On July 1, 2021, F called all of the bonds and retired them. The bond premium was amortized on a straight-line basis. Assume that there was a bond
issue cost of $100,000 and it was amortized on a straight line basis. Before income taxes, F Corp.'s gain or loss in 2021 on this early extinguishment of debt was:
Bond Payable
Bonds payable is a debt that holds the sum that the issuer owes bondholders. Since bonds often mature over a longer period of time than a year, this account is typically seen in the long-term debt area of the income statement.
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My options are
A) 16,000 gain
B) 29,000 loss
C) 24,000 gain
D) 101,000 loss
and A is not the ans for sure.
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