The Generally Accepted Method of Accounting for Gains or Losses

question 82

Multiple Choice

The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as

• A) an adjustment to the cost basis of the asset obtained by the debt issue.
• B) an amount that should be considered a cash adjustment to the cost of any other debt issued over the remaining life of the old debt instrument.
• C) an amount received or paid to obtain a new debt instrument and, as such, should be amortized over the life of the new debt.
• D) a difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemption.

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Definitions:

Contraries

Things or propositions that are opposite in nature, characteristic, or definition.

Universal

Including, relating to, or affecting all members of the class or group under consideration.

Particular

Referring to a specific detail or instance among general examples.

Associative Play

A stage of play in child development where children play together, sharing materials and ideas, but not necessarily working towards a common goal.