Bonds Payable Has a Balance of $1,000,000 and Premium on Bonds

question 69

Multiple Choice

Bonds Payable has a balance of $1,000,000 and Premium on Bonds Payable has a balance of $7,000. If the issuing corporation redeems the bonds at 101, what is the amount of gain or loss on redemption?

• A) $3,000 loss
• B) $3,000 gain
• C) $7,000 loss
• D) $7,000 gain

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Definitions:

Liability on Debts

The legal responsibility to pay money owed to creditors, either by an individual or a company.

Capital Contribution

Funds or assets provided by investors or partners to a company or partnership to support its operations and growth.

Partnership Assets

Properties or resources owned by a partnership that are used for the purpose of carrying on the partnership business.

Successor's Liability

The legal responsibility of a successor entity to bear the liabilities of its predecessor under certain conditions.