A corporation called an outstanding bond obligation four years before maturity. At that time there was an unamortized discount of $300,000. To extinguish this debt, the company had to pay a call premium of $100,000. Ignoring income tax considerations, how should these amounts be treated for accounting purposes? A) Amortize $400,000 over four years B) Charge $400,000 to a loss in the year of extinguishment C) Charge $100,000 to a loss in the year of extinguishment and amortize $300,000 over four years D) Either amortize $400,000 over four years or charge $400,000 to a loss immediately, whichever management selects
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Home » Business » A corporation called an outstanding bond obligation four years before maturity. At that time there was an unamortized discount of $300,000. To extinguish this debt, the company had to pay a call premium of $100,000.