A Company Has Bonds Outstanding with a Par Value of $100,000

question 18

Multiple Choice

A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement?

• A) $0 gain or loss.
• B) $1,500 gain.
• C) $1,500 loss.
• D) $3,000 gain.
• E) $3,000 loss.

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Definitions:

Enforceable

Describes a contract or law that can be legally imposed or acted upon.

Shale Rock

A fine-grained sedimentary rock composed of clay, mineral flakes, and organic matter, known for its ability to store oil and gas.

Mistake Of Value

An error regarding the understanding or assessment of the value of an item or deal, potentially affecting a contract's validity.

Material Facts

Important information that could influence a decision-making process, particularly in legal and financial contexts.