On January 1, 2019, Hipolito Corporation issued 5,000 of its 5 years, $1,000 face value, 11% bonds dated January 1 in an effective annual interest of 9%. Interest is payable each December 31. Perez uses an effective interest method of amortization. On December 31, 2020, the $3,000 bonds were extinguished early through acquisition in the open market by Perez for $2,970,000 plus accrues interest. How much is the gain on early retirement of bonds on December 31, 2020?
On January 1, 2019, Hipolito Corporation issued 5,000 of its 5 years, $1,000 face value, 11% bonds dated January 1 in an effective annual interest of 9%. Interest is payable each December 31. Perez uses an effective interest method of amortization. On December 31, 2020, the $3,000 bonds were extinguished early through acquisition in the open market by Perez for $2,970,000 plus accrues interest. How much is the gain on early retirement of bonds on December 31, 2020?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 8RE
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On January 1, 2019, Hipolito Corporation issued 5,000 of its 5 years, $1,000 face
How much is the gain on early retirement of bonds on December 31, 2020?
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