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Cone appropriately uses the straight line method

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On December 1, 2008, the Cone Company issued its 10%, $2 million face value bonds for $2.3 million, plus accrued interest. Interest is payable on November 1 and May 1. On December 31, 2010, the book value of the bonds, inclusive of the unamortized premium, was $2.1 million. On July 1, 2011, Cone reacquired the bonds at 98, plus accrued interest. Cone appropriately uses the straight line method for the amortization because the results do not materially differ from those of the effective interest method.

Required:
Prepare a schedule to compute the gain or loss on this extinguishment of debt. Show supporting computations in good form.

Reference no: EM13871497

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