Bonds were redeemed related problem


Nickel Inc. owns $600,000 of 10-year, 8% bonds as an investment on December 31, 2010. The bonds have 3 years remaining to maturity. The unamortized premium remaining on these bonds was $48,000. Nickel uses straight-line amortization. On May 1, 2011, $120,000 of the bonds were redeemed at 111. How much, and what type of gain or loss, most likely results from this redemption?

a) $4,667 ordinary gain.

b) $4,667 extraordinary gain.

c) $4,667 ordinary loss.

d) $4,667 extraordinary loss.

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Accounting Basics: Bonds were redeemed related problem
Reference No:- TGS079843

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