On January 2, 2009, Kowalchuk Corporation, a small company that follows ASPE, issued $1.5 million of 10% bonds at 97
The bonds are callable at 102 (that is, at 102% of their face amount), and on January 2, 2014, the company called a face amount of $850,000 of the bonds and retired them.
(a) Ignoring income taxes, calculate the amount of loss, if any, that the company needs to recognize as a result of retiring the $850,000 of bonds in 2014. Prepare the journal entry to record the retirement.
(b) How would the amount of the loss calculated in part (a) differ if the policy for Kowalchuk Corporation had been to carry the bonds at fair value and thus expense the costs of issuing the bonds at January 2, 2009? Assuming that Kowalchuk Corporation had followed this policy, prepare the journal entry to record the retirement. Assume the redemption price approximates fair value.
(c) How would your answers to (a) and (b) change if Kowalchuk were to follow IAS 39?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Question Posted: November 15, 2016 10:47:23