A Bond with a $500,000 Maturity Value Is Immediately Retired

question 46

Multiple Choice

A bond with a $500,000 maturity value is immediately retired for $515,000 plus accrued interest.The premium on bonds payable (bond premium) at the retirement date is $17,500.Which of the following statements is correct?

• A)The loss on the debt extinguishment is $32,500.
• B)The gain on the debt extinguishment is $2,500.
• C)The gain on the debt extinguishment is $32,500.
• D)The gain or loss on the debt extinguishment can't be determined without knowing the dollar amount of the accrued interest.

---

Definitions:

Defect Inspections

The process of examining products, components, or processes for flaws or deviations from specified standards to ensure quality.

Quality Saves Money

The principle that investing in higher quality processes, materials, and standards reduces costs over time by minimizing waste, errors, and defects.

Continuous Commitment

An ongoing, enduring dedication of an individual or group to a particular course of action or entity.

Statistical Methods

Techniques used to collect, analyze, interpret, and present numerical data to make informed decisions or predictions.