Exercise 14-17 Whispering Winds Corporation had bonds outstanding with a maturit

Question

Exercise 14-17 Whispering Winds Corporation had bonds outstanding with a maturity value of $540,000. On April 30, 2017, when these bonds had an unamortized discount of $10,000, they were called in at 102. To pay for these bonds, Whispering Winds had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 101 (face value $540,000). Issue costs related to the new bonds were $3,800. All issue costs were capitalized. Whispering Winds prepares financial statements in accordance with IFRS dy Ignoring interest, calculate the gain or loss and record this refunding transaction. (Round answers to o decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Credr

Explanation / Answer

Answer

Reacquisition Price (540,000 * 102%)

          550,800

Less: Net carrying amount of bonds redeemed

Par Value

            540,000

Unamortized discount

            (10,000)

          530,000

Loss on redemption

            20,800

Dr. $

Cr. $

Cash

541,600

Unamortized bond issue cost

3,800

Premium on bonds

5,400

Bonds payable

540,000

(Being new bonds issued)

Bonds Payable

540,000

Loss on redemption

20,800

Discount on bonds payable

10,000

Cash

550,800

(Being bonds redeemed)

Reacquisition Price (540,000 * 102%)

          550,800

Less: Net carrying amount of bonds redeemed

Par Value

            540,000

Unamortized discount

            (10,000)

          530,000

Loss on redemption

            20,800

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