Question

On June 30, 2021, Crane Company had outstanding 7%, $8040000 face amount, 15-year bonds maturing on June 30, 2031. Interest is payable on June 30 and December 31. The unamortized balance in the bond discount account on June 30, 2021 was $365000. On June 30, 2021, Crane acquired all of these bonds at 95 and retired them. What net carrying amount should be used in computing gain or loss on this early extinguishment of debt

Answer 1

Answer:

$7,675,000

Explanation:

The computation of the net carrying amount is shown below:-

Net carrying amount = Face amount - Unamortized balance in the bond discount account on June 30, 2021

= $8,040,000 - $365,000

= $7,675,000

Therefore for computing the net carrying amount we simply applied the above formula.

Hence, the net carrying amount is $7,675,000

Answer 2

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