On January 2, 2016, ABC COMPANY issued P1,500,000 of10% bonds at 97 due December 31, 2025. Legal andother costs of P24,000 were incurredin connection with the issue. Interest on the bonds is payable annually each December 31. The P24,000 issue costs are being deferred and amortized on a straight-line
On January 2, 2016, ABC COMPANY issued P1,500,000 of10% bonds at 97 due December 31, 2025. Legal andother costs of P24,000 were incurredin connection with the issue. Interest on the bonds is payable annually each December 31. The P24,000 issue costs are being deferred and amortized on a straight-line basis over the 10-year term of the bonds. The discount on the bonds is also being amortized on a straight-linebasis over 10 year. (Assumestraight-line is not materially different in effect from theeffective interestmethod).The bonds are callable at 101 and on January 2, 2021, ABC called P900,000 face amountof the bonds and retired them.
Required: Ignoring income taxes, compute the amount of gain or loss, if any, to be recognized by ABC as aresult of retiring the P900,000 bonds in 2021 and prepare the
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