On March 1, Year 1, Somar Co. issued 20-year bonds at a discount. By September 1, Year 6, the bonds were quoted at 106 when Somar exercised its right to retire the bonds at 105. The amount is material and considered to be unusual in nature and infrequently occurring with respect to Somar Co. How should Somar report the bond retirement on its Year 6 income statement under U.S. GAAP?
a. A loss in continuing operations.
b. An extraordinary gain.
c. A gain in continuing operations.
d. An extraordinary loss.
Correct answer is D.
I thought that if the bonds were quoted at 106 and retired at 105, Somar would be saving money and have a gain (I answered A). Can someone please assist with this? Thanks!
FAR - 84 (11/26/2014)
REG - 82 (5/15/2015)
AUD - 90 (7/20/2015)
BEC - 88 (2/26/2015)
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