85. On January 1, 2003, Cardinal Corporation issued 5% 25-year bonds at par and used the $12,000,000 proceeds to finance the construction of a new plant. On January 1, 2013, the company acquired the bonds on theopen market for $11,500,000. Assuming that Cardinal Corporation is neither bankrupt nor insolvent, the acquisition and retirement of the bonds results in which of the following:
86. Denny was neither bankrupt nor insolvent but was short of cash and could not make the mortgage payments on his personal residence in 2013. The bank that held the mortgage agreed to reduce the principal on the debt from $100,000 to $80,000 so that Denny’s monthly mortgage payments could be reduced to a manageable amount. Denny also had a vacation home with a mortgage whose payments were beyond his means. The mortgage holder on the vacation home agreed to reduce the mortgage from $60,000 to $50,000. The value of thepersonal residence was $80,000 and the value of the vacation home was $45,000 at the dates of the debt reduction.