Question

Chang Industries has bonds outstanding with a par value of $210,400 and a carrying value of $218,600. If the company calls these bonds at a price of $214,000, the gain or loss on retirement is:

Answer 1

The loss is $4600.

Explanation:

The par value of the bonds = $210400

The carrying value of the bonds or the actual value of bonds = $218600

The company calls the bonds at the price = $214000

Now have to find the gain or loss from the given information. Thus, below is the calculation to find the gain or loss.

Loss or gain on retirement = $214,000 - $218,600 = -$4,600

Thus the loss on retirement is $4600.