A Material Gain Earned When Retiring Bonds Before Their Maturity

question 25

Multiple Choice

A material gain earned when retiring bonds before their maturity date is recognized by

• A)amortizing it over the remaining life of the bond
• B)making a prior period adjustment
• C)reporting it as an extraordinary item in the year of retirement
• D)reporting it as an ordinary item in the year of retirement

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Definitions:

Capital Account Balance

A part of a country's balance of payments that records all transactions involving the purchase or sale of assets.

Current Account Balance

The current account balance is a country's trade balance plus net income and direct payments between it and other countries, indicating a nation's foreign trade and financial status.

Statistical Discrepancy

The difference between the sum of the components of GDP calculated on the income side and the expenditure side, due to measurement errors and data omissions.

International Reserves

International reserves are assets held by central banks in foreign currencies, gold, and special drawing rights, serving as a means to pay off international debt obligations or influence currency exchange rates.