On its December 31, 2006 balance sheet, Carl Corp. reported bonds payable of $6,000,000 and related unamortized bond issue costs of $320,000. The bonds had been issued at par. On January 2, 2007, Carl retired $3,000,000 of he outstanding bonds at par plus a call premium of $70,000. What amount should Carl report in its 2007 income statement as loss on extinguishment of debt (ignore taxes)?
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This solution computes the GAAP loss on the early extinguishment of a bond called at a premium.