X2 issued callable bonds on January 1, 2021. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value

01/01/2021 $ 229,267

12/31/2021 $ 15,400 $ 13,756 $ 1,644 227,623

12/31/2022 15,400 13,657 1,743 225,881

12/31/2023 15,400 13,553 1,847 224,033

12/31/2024 15,400 13,442 1,958 222,075

12/31/2025 15,400 13,325 2,075 220,000

X2 buys back the bonds for $103,000 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would X2 record on this date?

Question

Business

Silas Villarreal

7 July, 05:37

X2 issued callable bonds on January 1, 2021. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value

01/01/2021 $ 229,267

12/31/2021 $ 15,400 $ 13,756 $ 1,644 227,623

12/31/2022 15,400 13,657 1,743 225,881

12/31/2023 15,400 13,553 1,847 224,033

12/31/2024 15,400 13,442 1,958 222,075

12/31/2025 15,400 13,325 2,075 220,000

X2 buys back the bonds for $103,000 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would X2 record on this date?

+1

Answers (1)

Know the Answer?

Caiden Lester · Answer 1

Loss = $122,881

Explanation:

Relevant Data provided

Bay Back Price of the bond = $103,000

Carrying value of the Bond As on 12/31/2022 = $225,881

As per the given question the solution of gain or loss is provided below:-

Gain or Loss = Bay Back Price of the bond - Carrying value of the Bond As on 12/31/2022

= $103,000 - $225,881

Loss = $122,881

So, we have calculated the loss by using the above formula.