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$24,800 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $24,800 issue costs are being deferred and amortized on a straight-line basis over the 10-year term of the bonds. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable "interest method".)

The bonds are callable at 101 (i.e., at 101% of face amount), and on January 2, 2014, Banno called $1,044,000 face amount of the bonds and redeemed them.

Ignoring income taxes, compute the amount of loss, if any, to be recognized by Banno as a result of retiring the $1,044,000 of bonds in 2014.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9797282

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