Which of the Following Statements Is True with Regard to Early

question 139

Multiple Choice

Which of the following statements is true with regard to early retirement of bonds?

• A)If the carrying value of the bonds is higher than the redemption price,the issuing firm must record a loss.
• B)Firms always find it advantageous to retire bonds issued at lower rates with bonds issued at higher rates.
• C)It is always advantageous to carry out early retirement for bonds issued at a premium but not for bonds issued at a discount.
• D)Any gain or loss resulting from early retirement of bonds would appear on the income statement of the issuing company.

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