X2 issued callable bonds on January 1, 2018 The bonds pay interest annually on a

Question

X2 issued callable bonds on January 1, 2018 The bonds pay interest annually on accountant has projected the following amortization schedule from issuance until maturity December 31 each year X2s Interest ease in Carrying Carrying Value Date Cash Paid Value $121.379 120,569 119.884 $710 785 86 958 1059 $12,745 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 $13.455 13,455 3,455 3.455 3,455 12.588 2,497 12,396 118,059 X2 buys back the bonds for $120.550 immediately after the interest payment on 12/312019 and retires them Whet gain or loss, if any, would X2 record on this date? O No gain or Loss O $3,550 gain $1,542 loss O $666 loss

Explanation / Answer

D. $666 loss

X2 paid only $120,550 to remove a liability with a carrying value of $119,884 on December 31, 2019. The difference is the loss of $666.

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