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A company retired $200,000 of bonds,which have an unamortized premium of $8,000,by purchasing them on the open market for $210,000.What is the amount of the gain or loss on the retirement of the bonds?
A) There was a $10,000 loss.
B) There was a $2,000 loss.
C) There was a $10,000 gain.
D) There was an $18,000 loss.
Unamortized Premium
The portion of the bond premium that has not yet been amortized or gradually written off against earnings over the life of the bond.
Open Market
A market structure where economic transactions are conducted freely and transparently, allowing for unrestricted competition.
Gain or Loss
The financial result that occurs when the selling price of an asset differs from its original purchase price.
- Acknowledge the implications for accounting and financial statements following the retirement of bonds, alongside any gains or losses incurred.
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Learning Objectives
- Acknowledge the implications for accounting and financial statements following the retirement of bonds, alongside any gains or losses incurred.
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