On January 1, 2008, F Corp

question 23

Multiple Choice

On January 1, 2008, F Corp. issued 2,000 of its 10%, $1,000 bonds for $2,080,000. These bonds were to mature on January 1, 2018, but were callable at 101 any time after December 31, 2011. Interest was payable semiannually on July 1 and January 1. On July 1, 2013, F called all of the bonds and retired them. The bond premium was amortized on a straight-line basis. Before income taxes, F's gain or loss in 2013 on this early extinguishment of debt was:

• A)$16,000 gain.
• B)$20,000 loss.
• C)$24,000 gain.
• D)$60,000 gain.

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Definitions:

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Sales Dollars

The total revenue generated from the sale of goods or services, measured in dollar amount.

Common Fixed Expenses

Expenses that remain constant in total regardless of changes in the level of activity or volume of output.

Break-even

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.