Question

Clabber company has bonds outstanding with a par value of $113,000 and a carrying value of $105,100. if the company calls these bonds at a price of $101,500, the gain or loss on retirement is:

Answer 1

Gain on retirement of bonds = book value of bonds - the amount paid to the bondholders = 105,100 - 101,500 = $3600

So, $3600 should be the gain or loss on the retirement.