Reference no: EM132726026

Problem 1: Owl Co. retired its $2,500,000 par value, 6%, 10-year callable bonds early, on October 6 of the current year, paying $2,550,500, which included the accrued interest of $35,785 due at the date of the call. The carrying value of the bonds at retirement was $2,519,250. What is the gain or (loss) included in Owl's current year income statement for the early retirement of these bonds?

Group of answer choices

Option 1: ($31,250) Loss

Option 2: No gain or loss is recorded

Option 3: ($19,250) Loss

Option 4: $4,535 Gain