This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: bonds at the redemption date, (2) record the cash paid, and (3) recognize the gain or loss on redemption. The carrying value of the bonds is the face value of the bonds less unamortized bond discount or plus unamortized bond premium at the redemption date. To illustrate, assume at the end of the fourth period, Candlestick Inc., having sold its bonds at a premium, retires the bonds at 103 after paying the annual interest. Assume that the carrying value of the bonds at the redemption date is $100,400 (principal $100,000 and premium $400). Candlestick records the redemption at the end of the fourth interest period (January 1, 2014) as: Bonds Payable Premium on Bonds Payable Loss on Bond Redemption (To record redemption of bonds at 103) Note that the loss of $2,600 is the difference between the $103,000 cash paid and the $100,400 carrying value of the bonds....
View Full Document
- Spring '11
- Accounting, Generally Accepted Accounting Principles, historical cost