Didde Company issues $10,000,000 face value of 8% bonds at 96 on January 1, 2009. The bonds pay coupons semiannually on June 30 and December 31, and mature in 10 years. Didde uses straight-line amortization for discounts and premiums. Accordingly, at December 31, 2011, the unamortized discount is $280,000. On October 1, 2012, the bonds are called at 102 plus accrued interest. How much gain or loss would be recognized on the called bonds on October 1, 2012?

a. $637,500 loss

b. $450,000 loss

c. $200,000 loss

d. $400,000 loss