On April 30, one year before maturity, Middleton company retired $200,000 of its 9% bonds payable at the current market price of 101 (101% of the bond face amount, or $200,000 x 1.01 = &202,000). The bond book value on April 30 is $196,000, reflecting an unamortirized discount of $3,400. Bond interest is currently fully paid and recorded up to the date of retirement. what is the gain or loss on retirement of these bonds? Is the gain or loss a real economic gain or loss? Explain.
On April 30, one year before maturity, Middleton company retired $200,000 of its 9% bonds payable at the current market price of 101 (101% of the bond face amount, or $200,000 x 1.01 = &202,000). The bond book value on April 30 is $196,000, reflecting an unamortirized discount of $3,400. Bond interest is currently fully paid and recorded up to the date of retirement. what is the gain or loss on retirement of these bonds? Is the gain or loss a real economic gain or loss? Explain.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On April 30, one year before maturity, Middleton company retired $200,000 of its 9% bonds payable at the current market price of 101 (101% of the bond face amount, or $200,000 x 1.01 = &202,000). The bond book value on April 30 is $196,000, reflecting an unamortirized discount of $3,400. Bond interest is currently fully paid and recorded up to the date of retirement.
what is the gain or loss on retirement of these bonds? Is the gain or loss a real economic gain or loss? Explain.
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