Materially different from the effective-interest method

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Reference no: EM131461022

On January 1, 2012, Hoppy Corporation issued $18,000,000 of 10% ten-year bonds at 103. The bonds are callable at the option of Hoppy at 105. Hoppy has recorded amortization of the bond premium on the straight-line method (which was not materially different from the effective-interest method). On December 31, 2018, when the fair value of the bonds was 96, Hoppy repurchased $4,000,000 of the bonds in the open market at 96. Hoppy has recorded interest and amortization for 2018. Ignoring income taxes and assuming the gain is material, Hoppy should report this reacquisition as: a loss of $244,000 a gain of $244,000 a loss of $196,000 a gain of $196,000

Reference no: EM131461022

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