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Nickel Incorporated bought $100,000 of 3-year, 9% bonds as an investment on December 31, 2023 for $109,000. The investment receives interest annually and Nickel uses straight-line amortization. On May 1, 2024, the issuer retired $20,000 of the bonds at 116. As a result of the retirement, Nickel will report a:

Respuesta :

the carrying value of the bonds is $100,000 - ($100,000 / 3) = $66,667. The cash received from the retirement is $20,000 * 116% = $23,200. So, the gain would be $23,200 - $66,667 = -$43,467. Therefore, Nickel will report a loss of $43,467. Hope that helps!