Final answer:
Option B is correct. When a company retires bonds at maturity, the book value will equal their face value, since any discounts or premiums would have been amortized. There is no gain or loss to be recorded when retiring bonds at maturity.
Step-by-step explanation:
When a company retires bonds at maturity, option B is correct: the book value of the bonds will equal their face value. At maturity, the bonds are redeemed, and the company pays the bondholders the face value of the bonds. The issue price is only relevant at the time of issuance and won't affect the redemption at maturity. A company will not record a gain on redemption unless the bonds are retired before maturity and the market value is below the book value, which is not the case when retiring at maturity.
Bonds represent an agreement where the borrower pays the investor the face value and the last interest payment at maturity. The face value is the principal amount due to the investor, while the book value could vary depending on the issuing price, premium, or discount. However, at maturity, any discounts or premiums would have been fully amortized, making the book value equal to the face value. There is no gain or loss to be recorded at maturity because the payment matches the liability on the books.