If a Company Calls a Bond Early and the Carrying

question 9

Multiple Choice

If a company calls a bond early and the carrying value of the bond is less than the cash received by the investor for the bond,the difference for the issuing company

• A)decreases bonds payable.
• B)increases bonds payable.
• C)is not recognized.
• D)is a gain.
• E)is a loss.

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Definitions:

Bankruptcy Code

A federal law that outlines the various procedures for conducting bankruptcy cases, allowing debtors to eliminate or reorganize their debts under the supervision of the court.

Trustee

An individual or entity appointed to manage and hold property or assets on behalf of others, often used in trust arrangements and bankruptcy proceedings.

Creditors

Individuals, businesses, or institutions to whom money is owed by debtors.

Straight Bankruptcy

A term sometimes used for Chapter 7 bankruptcy in the United States, where a debtor's assets are liquidated to pay off creditors.