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9 April, 05:41

Chang industries has bonds outstanding with a par value of $212,000 and a carrying value of $221,000. if the company calls these bonds at a price of $216,000, the gain or loss on retirement is:

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  1. 9 April, 05:47
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    The gain on retirement is $5,000

    Step-by-step explanation:

    In this question, we are asked to calculate the gain or loss on retirement if a company calls some bonds at a particular price.

    From the question, we can identify the following needed parameters to solve the question;

    The carrying value of bonds = $221,000

    Call price of bonds = $216,000

    Mathematically, the gain on retirement can be calculated as follows;

    Gain on retirement = carrying value - call price

    = $221,000 - $216,000 = $5,000

    Hence, the gain on retirement is $5,000
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