Question

Bramble Corporation had bonds outstanding with a maturity value of $550,000. On April 30, 2020, when these bonds had an unamortized discount of $11,000, they were called in at 106. To pay for these bonds, Bramble had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 11 years. The new bonds were issued at 105 (face value $550,000). Issue costs related to the new bonds were $2,600. All issue costs were capitalized. Bramble prepares financial statements in accordance with IFRS.

Ignoring interest, calculate the gain or loss and record this refunding transaction.

Answer 1

Answer: as calculation of gain/2055 particulars 1 Amount Amount Re-Acquuisition price [$550,000x106%] $583,000 Less:- Net carrying amount of bonds redeemedia, par value $ 550,000 un amortized discount ($11,000) ($539,000) - Loss on redemption of bouda $44,000 (6) Journal entries: Date particulars F Debit credit Bonds payable Ale or $550,000 Loss on redemption of bonds Ah or $44.000 To Discount onbonds payable $11.000 1. To cash $583,000 Being record redemption of bonds poupable] Cash Ale [oś 550,000 x105%)- $2,600] DM $574,900 un amortized bond issued cost Ale or $ $2,600 To premiuem on bonds payable $27500 To Bonds payable 550,000 (Being record issuance of Necobonds