Question

On January 1, 2020, Solugenix issued $400,000 of 7.125 percent Senior Notes due January 1, 2030, at par value. Interest on the notes is payable semiannually. At December 31, 2021, the bonds traded at 105. If the company were to repurchase the remaining notes on December 31, Year 2021, what would be the gain or loss on the repurchase

Answer 1

$20,000 loss

Step-by-step explanation:

Repurchase of bond = Repurchase price - Carrying value

Repurchase of bond = ($400,000*105%) - $400,000

Repurchase of bond = $420,000 - $400,000

Repurchase of bond = $20,000 loss

Thus, the loss on the repurchase of the bond is $20,000