Problem:
On June 30, 2013, K Co. had outstanding 9%, $16,500,000 face value bonds maturing on June 30, 2018. Interest is payable semiannually every June 30 and December 31. On June 30, 2013, after amortization was recorded for the period, the unamortized bond premium and bond issue costs were $56,000 and $165,000, respectively. On that date, K acquired all its outstanding bonds on the open market at 99 and retired them.
Required:
Question: At June 30, 2013, what amount should K recognize as gain on redemption of bonds before income taxes?
Note: Please describe comprehensively and provide step by step solution.