question archive Kraken Corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium
Kraken Corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium
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Kraken Corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is:
$22,000 gain.
$10,000 gain.
$10,000 loss.
$-0-
none of the above
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Answer:
$ 22000 gain
A bond is a type of debt instrument that a company uses to borrow money. A bondholder pays money to a company to receive a bond,& the company in turn pays the bondholder periodic interest payment and repay the bondholder on the bonds maturity date.some bond allow to repaid or retire the bonds before the maturity date.If company retires its bonds before their maturity date we must calculate gains or loss on the retired bonds.
