Question

The 12% bonds payable of Nyman Co. had a carrying amount of $2,080,000 on December 31, 2012. The bonds which had a face value of $2,000,000 were issued at a premium to yield 10%. Lyman uses the effective-interest method of amortization. Interest is paid on June 30 and December 31. On June 30, 2013, several years before their maturity Nyman retired the bonds at 104 plus accrued interest. The loss on the retirement ignoring taxes is...

Answer 1

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Answer 2

The loss on the retirement ignoring taxes is 1.895.000

Step-by-step explanation:

Carrying amount - (Face Value * Interest Rate bonds) - (Carrying amount * premium yield)

=$2,080,000 - (2.000.000*0.06) - (2,080,000*0.05)

= 1.856.000

= (2.000.000*0.06 * 1,04) -1.856.000

= 1.895.000