A Company Has Bonds Outstanding with a Par Value of $100,000

question 18

Multiple Choice

A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement?

• A) $0 gain or loss.
• B) $1,500 gain.
• C) $1,500 loss.
• D) $3,000 gain.
• E) $3,000 loss.

---

Definitions:

Limited Liability Company (LLC)

An unincorporated business that is taxed like a partnership, with the members paying personal income taxes, and has the limited liability of a corporation.

Unincorporated

Referring to entities or businesses that have not formed or been recognized as a corporation under law.

Taxed

Subjected to financial charges or levies imposed by a government on income, transactions, or property.

Partnership

A legally sanctioned business model where two or more associates share both the responsibilities of managing the business and the profits derived from it.