A Gain Is Earned When Retiring Bonds Before Their Maturity

question 147

Multiple Choice

A gain is earned when retiring bonds before their maturity date is recognized by

• A) amortizing it over the remaining life of the bond.
• B) making a prior period adjustment.
• C) reporting it as an extraordinary item in the year of retirement.
• D) reporting it as an ordinary item in the year of retirement.

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Definitions:

Articles Amendment

A modification or change made to the articles of incorporation or other formal documents governing a corporation.

Pre-merger Market Values

The valuation of companies involved in a merger as determined before the merger takes place, often used to assess the financial health and assets of the entities.

Liabilities Acquisition

The process of obtaining new obligations or debts, often through purchases or other financial transactions.

Fair Consideration

In the context of contracts, it refers to something of value that is exchanged between parties, which is considered reasonable and equitable.