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Question
A bond with a $750,000 maturity value is immediately retired for $745,000 plus accrued interest. The discount on bonds payable (bond discount) at the retirement date is $25,500. Which of the following statements is correct?
A. The gain on the debt extinguishment is $5,000.
B. The loss on the debt extinguishment is $20,500.
C. The gain on the debt extinguishment is $30,500.
D. The gain or loss on the debt extinguishment can't be determined without knowing the dollar amount of the accrued interest.
Answer
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