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:

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks.

Available-for-Sale Debt Securities

Financial assets acquired primarily for selling in the short term but may be held for a longer period, reported at fair market value on balance sheets.

Premiums

Additional amounts paid over the normal cost or face value, often relating to insurance costs or bond prices.

Amortized

The gradual reduction of a debt over a period of time through regular payments that cover both principal and interest.