Hills Corp. canceled an outstanding bond obligation four years before maturity. At that time there was an
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Question:
Hills Corp. canceled an outstanding bond obligation four years before maturity. At that time there was an unamortized discount of $200,000. To extinguish this debt, Hills had to pay a ransom premium of $40,000.
Ignoring income tax considerations, how should these amounts be treated for accounting purposes?
Record a loss of $40,000 in the year of termination and write off $200,000 over four years. |
Write off $240,000 over four years or record a loss of $240,000 immediately, whichever management chooses. |
Amortize $240,000 in four years. |
Record a loss of $240,000 in the year of termination. |
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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