Question - The Sonia Corporation is considering retiring one of its bond issues. The bonds are $10,000,000, 6%, 10-year bonds, issued five years ago at par.
Calculate the gain or loss the company would recognize if it retired the bonds for $9,700,000. Assume that all appropriate interest payments have been made on the bonds before they are retired.
a. $900,000 gain
b. $300,000 loss
c. $0
d. $300,000 gain