On Its December 31, 2020 Statement of Financial Position, Mackeral

question 73

Multiple Choice

On its December 31, 2020 statement of financial position, Mackeral Ltd. reported bonds payable of $ 500,000. The bonds had been issued at par. On January 2, 2021, Mackeral retired one half of the outstanding bonds at 101 plus a call premium of $ 20,000. Ignoring income taxes, what amount should Mackeral report on its 2021 income statement as loss on extinguishment of debt?

• A) $ 22,500
• B) $ 20,000
• C) $ 2,500
• D) $ 0

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Definitions:

Product Placement

A marketing strategy where branded goods or services are placed in a context usually devoid of ads, like movies or television shows.

Overheard Communications

Conversations or transmissions that are intercepted or accidentally heard by someone who was not the intended recipient.

Foot-in-the-door Technique

A persuasion strategy by which agreeing to a small request increases the likelihood of agreeing to a second, larger request.

Pique Technique

A persuasion technique that aims to capture one's attention by making an unusual request or statement.