a.) On January 2, 2009, Banno Corporation issued $2,170,000 of 10% bonds at 97 due December 31, 2018. Legal and other costs of $27,800 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $27,800 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-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable interest method.) The bonds are callable at 102 (i.e., at 102% of face amount).

Banno called the full $2,170,000 face amount of the bonds and redeemed them. Ignoring income taxes, compute the amount of gain or loss, if any, to be recognized by Banno as a result of retiring the bonds on January, 2 2014.

b.) On January 2, 2009, Banno Corporation issued $2,170,000 of 10% bonds at 97 due December 31, 2018. Legal and other costs of $27,800 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $27,800 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-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable interest method.) The bonds are callable at 102 (i.e., at 102% of face amount).

Banno called $1,102,000 in face amount of the bonds and redeemed them. Ignoring income taxes, compute the amount of gain or loss, if any, to be recognized by Banno as a result of retiring the $1,102,000 of bonds on January 2, 2014.