A $294,000 bond was redeemed at 98 when the carrying amount of the bond was $289,590....
A $294,000 bond was redeemed at 98 when the carrying amount of the bond was $289,590. What amount of gain or loss would be recorded as part of this transaction?
Select the correct answer.
gain on bond redemption of $1,470.
loss on bond redemption of $4,410.
gain on bond redemption of $5,880.
loss on bond redemption of $1,470.
Homework Answers
Answer: Gain on bond redemption of $1,470 is Correct Answer
Explanation
Carrying value of bond = $289,590
Amount of redeemed bond = $294,000 x 98% = $288,120
Therefore, Gain on bond redemption = $289,590- $288,120 = $1,470
Why Gain is, Liabilities paid below the book value
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