Clabber Company has bonds outstanding with a par value of $100,000 and a carrying value of $97,300. If the company calls these bonds at a price of $95,000, the gain or loss on retirement is:
a. $5,000 loss
b. $2,700 gain
c. $2,700 loss
d. $2,300 loss
e. $2,300 gain

Sometimes company retires their outstanding bonds issued before maturity. If the carrying value of the issued bonds are more than the price paid to retire the bond early the there is a gain on the retirement of bonds, as the they has to pay less for a liability.

As per given data

Carrying value of Bond = $97,300

Early Maturity cost of the bond = $95,000

Gain on early maturity = $97,300 - $95,000 = $2,300

Clabber Company has bonds outstanding with a par value of $100,000 and a carrying value of $97,300. If the company calls these bonds at a price of $95,000, the gain or loss on retirement is: a. $5,000 loss b. $2,700 gain c. $2,700 loss d. $2,300 loss e. $2,300 gain

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Clabber Company has bonds outstanding with a par value of $100,000 and a carrying value of $97,300. If the company calls these bonds at a price of $95,000, the gain or loss on retirement is:
a. $5,000 loss
b. $2,700 gain
c. $2,700 loss
d. $2,300 loss
e. $2,300 gain