Question

Clabber company has bonds outstanding with a par value of $108,000 and a carrying value of $102,100. if the company calls these bonds at a price of $99,000, the gain or loss on retirement is:

Answer 1

To find whether there was loss or gain on retirement , we need to compare the carrying value with the market value.

Here the carrying value is $ 102,100

and the market value is $ 99,000

Since the carrying value of $ 102,100 is greater than the market value of $ 99,000, there is a gain of $ 3,100 ( 102,100 - 99,000 )