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How would they account for this transaction

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Problem - On January 1, 2012 ABC, Inc. issued 20,000 10-year bonds (par value of $1,000 each), with an 8% coupon rate, and interest paid semiannually (twice a year). The first payment is scheduled to occur on June 30th. At the time of the bond issuance, the market rate for a similar debt security was currently yielding 6%. ABC, Inc. becomes more credit worthy over the first 2 years after the initial bond issuance, and the market is now (1/1/2014) demanding an interest rate of only 4%. If ABC, Inc. decides to retire the bond early by purchasing it back via the bond market on January 1, 2014, how would they account for this transaction (assume they retire the bond for cash, and the bonds have an unrestricted call feature)?

Reference no: EM133007779

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