When retiring bonds before maturity, you debit Bonds Payable for the carrying amount of the bonds being retired. The carrying amount is the face value of the bonds minus any unamortized premium or plus any unamortized discount at the time of retirement. Additionally, you may need to consider any gain or loss on the retirement, which would be recorded as a separate account depending on whether the carrying amount was higher or lower than the amount paid to retire the bonds.
When retiring bonds before maturity, debit Bonds Payable for ____________.
3 answers
A.
the callable amount
B.
the market value
C.
the bond amount less any discounts or plus any gains.
D.
the face value
the callable amount
B.
the market value
C.
the bond amount less any discounts or plus any gains.
D.
the face value
The correct answer is:
C. the bond amount less any discounts or plus any gains.
When retiring bonds before maturity, you would debit Bonds Payable for the carrying amount, which is the bond's face value adjusted for any unamortized discounts or premiums.