Question 14 1 point A corporation recognizes a gain or loss

Question 14 (1 point) A corporation recognizes a gain or loss a) when bonds are redeemed at or before maturity. b) when bonds are converted into common stock and when they are before maturity. c) only when bonds are redeemed before maturity. d) only when bonds are converted into common stock Save ???? FT0

Solution

Dear student,,,,Thank you for using chegg..Answer is c only when bonds are redeemed before maturity

When a company retires bonds before maturity below things need to be done -

a) carrying value of the bonds at the redemption date should be eliminated

b) cash paid should be recorded,

c) and gain or loss on redemption should be recognised

Gain or loss on redemption= cash paid on redemption - carrying value of the bonds.