5. (TCO D) On January 1, 2006, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $950,000. These bonds were to mature on January 1, 2016, but were callable at 101 any time after December 31, 2009.

5. (TCO D) On January 1, 2006, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $950,000. These bonds were to mature on January 1, 2016, but were callable at 101 any time after December 31, 2009. Interest was payable semiannually on July 1 and January 1. On July 1, 2011, Goll called all of the bonds and retired them. Bond discount was amortized on a straight-line basis. Before income taxes, Goll’s gain or loss in 2011 on this early extinguishment of debt was (Points : 5)

$27,500 gain

$35,000 gain

$32,500 loss

$40,000 loss

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