On June 30, 2002, Free Company had outstanding 8%, P1,000,000 face amount, 15-year bonds maturing on June 30 , 2009. Interest is payable on June 30 and December 31. The unamortized balance on June 30, 2002, in the bond discount and bond issue costs accounts were P35,000 and P10,000 respectively. Free acquired all of these bonds at 94 on June 30, 2002, and retired them. Ignoring income taxes, how much gain should Free report on this early extinguishment of debt?

On June 30, 2002, Free Company had outstanding 8%, P1,000,000 face amount, 15-year bonds maturing on June 30 , 2009. Interest is payable on June 30 and December 31. The unamortized balance on June 30, 2002, in the bond discount and bond issue costs accounts were P35,000 and P10,000 respectively. Free acquired all of these bonds at 94 on June 30, 2002, and retired them. Ignoring income taxes, how much gain should Free report on this early extinguishment of debt?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2014, New Country issued $200,000 of ten-year 8% bonds at 98. These bonds were callable at 102 at any time after three years. Straight-line amortization was used. On January 1, 2018, a new bond issue was sold and the old bonds were called. What was the loss on bond retirement? $8,000 $2,000 $6,400 $4,400
On June 30, 2020, Kikiam Inc. had outstanding 8%, P3,000,000 face amount, 15-year bonds maturing on June 30, 2027. Interest is payable on June 30 and December 31. The unamortized balances of bond discount as of June 30, 2020 is P105,000. Kikiam re-acquired all its bonds at 94 on June 30, 2020 and retired them. Ignoring income taxes, how much is the gain should Kikiam report on this early extinguishment of debt? A. 45,000 B. 75,000 C. 180,000 D. 105,000
Didde Company issues $20,000,000 face value of bonds at 96 on January 1, 2013. The bonds are dated January 1, 2013, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2016, $12,000,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2016? please show me the work, the calculation.
QUESTION 2 Presented below are two independent situations: i) Horton Company redeemed $400,000 face value, 12% bonds at 96 on July 31, 2021. The carrying value of the bonds on the retirement date was $428,500. The bonds pay annual interest and the interest payment due on July 31, 2021, has been made and recorded. ii) Ball Corporation retired $380,000 face value, 10% bonds on September 30, 2021, at 101. The carrying value of the bonds on the retirement date was $371,500. The bonds pay annual interest and the interest payment due on September 30, 2021 has been made and recorded.
On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 9% bonds with a book value of $965,500. The indenture specified a call price of $982,000. The bonds were issued previously at a price to yield 11% and interest payable semi-annually on July 1 and January 1. Tiny Tim called the bonds (retired them) on July 1, 2021. What is the amount of the loss on early extinguishment?
On December 31, 2014, Dadan Company had outstanding 12%, P5,000,000 face value bonds maturing on December 31, 2019. Interest was payable semiannually every June 30 and December 31. On December 31, 2014, after amortization was recorded for the period, the unamortized bond discount and bond issue cost were P500,000 and P300,000, respectively. On that date, Dadan acquired all its outstanding bonds on the open market at 98 and retired them. At December 31, 2014, what amount should Dadan recognize as pretax loss on early extinguishment of bonds? A. 700,000 B. 400,000 C. 200,000 D. 100,000
Show the solution in good accounting form
On August 1, 2011, Airport Company sold Paxton Company $1,000,000 of 10-year, 6% bonds, dated July 1 at 100 plus accrued interest. On March 1, 2012, Paxton sold half of the bonds for $520,000 plus accrued interest. Present entries to record the following transactions: Paxton Company: (1) Purchase of bonds on August 1, 2011. (2) Receipt of first semiannual interest amount on December 31, 2011. (3) The sale of the bonds on March 1, 2012.
On June 30, 2002, Free Company had outstanding 8%, P1,000,000 face amount, 15-year bonds maturing on June 30 , 2009. Interest is payable on June 30 and December 31. The unamortized balance on June 30, 2002, in the bond discount and bond issue costs accounts were P35,000 and P10,000 respectively. Free acquired all of these bonds at 94 on June 30, 2002, and retired them. Ignoring income taxes, how much gain should Free report on this early extinguishment of debt? P15,000 P25,000 P35,000 P60,000
The following information is available for compton company retired $45000 of 9.25% bonds before they were supposed to come due. the bonds were retired at 103 (103% of the bond face amount). the loss on the retirement was $3100. based on this information what is the bond book value?
None
On July 31, 2010, Honedge Co. issued P1,000,000 of 10%, 15 year bonds at par and used a portion of the proceeds to call its 600 outstanding 11%, P1,000 face value bonds, due on July 31, 2010 at 102. On that date, unamortized bond premium relating to the 11% bonds was P65,000. In its 2010 income statement, what amount should Honedge report as gain or loss, before income taxes, from retirement of bonds? A. 77,000 loss B. 65,000 loss C. 53,000 gain D. 0