Question: extinguishment of bonds prior to maturity on december 1 2014...
Extinguishment of Bonds Prior to Maturity
On December 1, 2014, Cone Company issued its 8%, $530,000 face value bonds for $610,000, plus accrued interest. Interest is payable on November 1 and May 1. On December 31, 2016, the book value of the bonds, inclusive of the unamortized premium, was $560,000. On July 1, 2017, Cone reacquired the bonds at 99 plus accrued interest. Cone appropriately uses the straight-line method for the amortization because the results do not materially differ from those of the effective interest method.
Prepare a schedule to compute the gain or loss on this redemption of debt. Enter all values as positive values.
|Computation of Gain on Extinguishment of Debt|
|July 1, 2017|
|Book value of bonds on December 1, 2014||$|
|Book value of bonds on December 31, 2016|
|Amortization for 25 months||$|
|Book value of bonds on December 31, 2016||$|
|Amortization for 2017 to July 1, 2017|
|Book value of bonds on July 1, 2017||$|
|Cost of reacquisition|
|Gain on bond redemption||$|