Chang Company Retired Bonds with a Face Amount of ¥60,000,000

question 25

Multiple Choice

Chang Company retired bonds with a face amount of ¥60,000,000 at 98 when the carrying value of the bond was ¥59,780,000. The entry to record the retirement would include a

• A) gain on bond redemption of ¥980,000.
• B) loss on bond redemption of ¥980,000.
• C) loss on bond redemption of ¥1,200,000.
• D) gain on bond redemption of ¥1,420,000.

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Definitions:

Trading Investments

Securities bought and held primarily for selling in the short term to profit from price differences.

Realized Gain

The profit made from selling an asset at a higher price than its purchase cost.

Fair Values

the estimated market value of an asset or liability, based on current prices in an open and competitive market.

Temporary Investments

Investments in stocks, bonds, or other securities that a company intends to sell within a short period, typically one year.