A company has 10%, 20-year bonds outstanding with a par value of $500,000. The company calls the bonds at $480,000 when the unamortized discount is $24,500. Calculate the gain or loss on the retirement of these bonds.
What will be an ideal response?
| Par value of bonds | $500,000 |
| Less discount | (24,500) |
| Carrying value of bonds | $475,500 |
| Cash payment ($500,000 * .96) | 480,000 |
| Loss on retirement | $ 4,500 |
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