Determining Gain or Loss on Bond Redemption

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Problem - Determining Gain or Loss on Bond Redemption - On April 30, one year before maturity, Middleton Company retired $200,000 of its 9% bonds payable at the current market price of 101 (101% of the bond face amount, or $200,000 x 1.01= $202,000). The bond book value on April 30 is $196,600, reflecting an unamortized discount of $3,400. Bond interest is currently fully paid and recorded up to the date of retirement. What is the gain or loss on retirement of these bonds? Is this gain or loss a real economic gain or loss? Explain.

Reference no: EM132923816

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