If bonds of $1,000,000 with unamortized discount of $10,000 are redeemed at 98, the gain on redemption of bonds is $10,000.

Unamortized Discount

The portion of a bond discount that has yet to be expensed in the income statement over the bond's life.

Gain

Refers to the profit earned from the sale of an asset or investment for more than its purchase cost, excluding income from the primary business activities.

Redeemed

The process of exchanging a financial security or voucher for cash, goods, or services.