Popper Corp. issues 8% bonds at 96 on January 1, 2019. The bonds
have a face value of $10,000,000, pay coupons semiannually on June
30 and December 31, and mature in 10 years. Popper uses
straight-line amortization for discounts and premiums. Accordingly,
at December 31, 2021, the unamortized discount is $280,000. On
October 1, 2022, Popper invokes a call option and extinguishes the
bonds at 102 plus accrued interest. How much gain or loss should
Popper recognize on the early extinguishment?
A. $637,500 LOSS
B. $450,000 LOSS
C. $200,000 LOSS
D. $400,000 LOSS
A. $637,500 LOSS
B. $450,000 LOSS
C. $200,000 LOSS
D. $400,000 LOSS
