Maturity Value - Gain or Loss
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Benjamin Company had bonds outstanding with a maturity value of $1,500,000. On June 30, 2010, when these bonds had an unamortized premium of $21,000, they were called in at 103. To pay for these bonds, Benjamin had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 20 years. The new bonds were issued at 98 (face value $1,800,000). Issue costs related to the new bonds were $26,000.
Ignoring interest, compute the gain or loss and record this refunding transaction.
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Solution Summary
Through computations of the book value of the bond and the redemption cost, the gain or loss from the debt is calculated.
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First, compute the book value of the ...
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