On January 1, 2015, Hernandez Corporation issued $18,000,000 of 10% ten-year bonds at 103. The bonds are callable at the option of Hernandez at 105. Hernandez has recorded amortization of the bond premium on the straight-line method (which was not materially different from the effective-interest method).

On December 31, 2021, when the fair value of the bonds was 96, Hernandez repurchased $4,000,000 of the bonds in the open market at 96. Hernandez has recorded interest and amortization for 2021. Ignoring income taxes and assuming that the gain is material, Hernandez should report this reacquisition as

b. a gain of $196,000.

this is the answer but i dont know how we reach there

please show your steps (especially where you get the 36000 from)