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
icon
Related questions
Question
100%

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?

 

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L