Powell Company Owns an 80% Interest in Sauter, Inc

question 12

Multiple Choice

Powell Company owns an 80% interest in Sauter, Inc.On January 1, 2016, Sauter issued $400,000 of 10-year, 12% bonds at a premium of $50,000.On December 31, 2021, 5 years after original issuance, Powell purchased all of the outstanding bonds for $390,000.Both firms use the straight-line method of amortization. ​
What is the gain on retirement on the 2021 consolidated income statement?
​

• A)​$12,500
• B)​$22,500
• C)​$10,000
• D)​$35,000

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