What amount of gain must fely report on early extinguishment

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Problem 1: On June 30, 2002, Fely Corporation had outstanding 8%, $1,000,000 face amount, 15-year bonds maturing on June 30 , 2009. Interest is payable on June 30 and December 31. The unamortized balance on June 30, 2002, in the bond discount and bond issue costs accounts were $35,000 and $10,000 respectively. Fely acquired all of these bonds at 94 on June 30, 2002, and retired them. Ignoring income taxes, what amount of gain must Fely report on this early extinguishment of debt?

Option 1: 15,000
Option 2: 25,000
Option 3: 35,000
Option 4: 60,000

Reference no: EM133009843

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