Early extinguishment of debt problem


On January 1, 2006, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2016, but were callable at 101 any time after December 31, 2009. Interest was payable semiannually on July 1 and January 1. On July 1, 2011, Goll called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Goll's gain or loss in 2011 on this early extinguishment of debt was:

a) $30,000 gain.

b) $12,000 gain.

c) $10,000 loss.

d) $8,000 gain.

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Accounting Basics: Early extinguishment of debt problem
Reference No:- TGS076722

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