Chapter 8, Problem 8.5A.3E

To determine

Introduction: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

To choose: The correct option.