Repurchase of Bonds Outstanding Trendy Corporation recently generated a substantial amount of cash from the sale of an operating division and wishes to use some of the money to reduce its long-term debt. It has decided to retire $600,000 of bonds that were issued at a discount and have a current book value of $576,000. A recent increase in interest rates has driven the current market price of the bonds down, and Trendy can purchase the bonds for $569,000 in the open market.

a. If the bonds are retired at par value, what amount of gain or loss on bond retirement will be reported?

b. If the bonds are purchased in the open market and retired, what amount of gain or loss on bond retirement will be reported?

c. If the current market price of the bonds were $608,000 and Trendy purchased the bonds in the open market, what amount of gain or loss would be reported?

d. If the bonds are not retired, should Trendy adjust the carrying value of the bonds to $569,000? Explain.

e. If the bonds are selling in the open market at $608,000, should the management of Trendy wait until the bonds are selling at a discount before it retires the bonds? Explain.