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On January 1, 2020, Halibut Corp. issued $1,000,000, 10% bonds for $1,040,000. These bonds were to mature on January 1, 2030 but were callable at
On January 1, 2020, Halibut Corp. issued $1,000,000, 10% bonds for $1,040,000. These bonds were to mature on January 1, 2030 but were callable at 101 any time after December 31, 2020. Interest was payable semi-annually on July 1 and January 1. On July 1, 2025, Halibut called all the bonds and retired them. Bond premium was amortized on a straight-line basis. Ignoring income taxes, Halibut's gain or loss in 2025 on this early extinguishment of debt was
$12,000 gain.
$8,000 gain.
$10,000 loss.
$8,000 loss.
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