1. When canceling debt before its maturity, debt retirement, it is theorized tha

Question

1. When canceling debt before its maturity, debt retirement, it is theorized that the recall of the debt is a current decision. For that reason any gains or losses arising from the debt retirement should be

A. reported in the current period income statement as an extraordinary item

B. reported in the current period income statement as an extraordinary item, net of tax

C. reported in the current period statement of retained earnings as a prior period adjustment

D. reported in the current period income statement but not as an extraordinary item

Explanation / Answer

Ans:

D. reported in the current period income statement but not as an extraordinary item

Explantaion:

When canceling debt before its maturity, debt retirement, it is theorized that the recall of the debt is a current decision. For that reason any gains or losses arising from the debt retirement should be reported in the current period income statement but not as an extraordinary item.

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