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    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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    First, compute the book value of the ...

    Solution Summary

    Through computations of the book value of the bond and the redemption cost, the gain or loss from the debt is calculated.