Knowledge Check 01 On January 1, Year 1, a company issues $100,000 of 8% bonds maturing in 10 years when the market rate of interest is 9%. The bonds were issued at a discount. Market interest rates drop to 6% by December 31, Year 2. The company retires these bonds on December 31, Year 2 Which of the following is true? O O The bonds can be retired at their carrying value O The company will incur a loss O The company will incur a gain O No gain or loss will be recorded