On August 1, 2018, All-Care Inc. sold 8%, five-year bonds with a maturity value of $2,000,000 for $1,964,000. Interest on the bonds is payable semi-annually on August 1 and February 1. The bonds are callable at 104 at any time after August 1, 2020. By October 1, 2020, the market rate of interest has declined, and the market price of All-Care's bonds has increased to 102.

The company decides to refund the bonds by selling a new 6% bond issue to mature in five years. All-Care begins to reacquire its 8% bonds in the market and is able to purchase

$600,000 worth at 102. The remainder of the outstanding bonds are acquired by exercising the bond call feature.

Required

a. Calculate All-Care's total gain or loss in reacquiring the 8% bonds. Assume the company uses straight-line amortization. Show calculations.