LPC Calls the Bonds at 103 Immediately After the Interest

question 82

Multiple Choice

LPC calls the bonds at 103 immediately after the interest payment on 12/31/10 and retires them. What gain or loss, if any, would LPC record on this date?

• A)No gain or loss
• B)$3,717 gain
• C)$6,000 loss
• D)$2,283 loss The cash paid by LPC was 103% of $200,000 maturity (face) value, or $206,000.The liability removed is $203,717.The difference is the loss on the bond retirement, $2,283.

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