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What gain or loss on bond retirement should be shown

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Question - On January 1, 2009, Sandra Co's long term liabilities consists of P400,000 par value 10% bonds payable due on January 1, 2013 with unamortized discount of P8,000. On January 2, 2009, Bullock Corp which is Sandra's 90% owned subsidiary purchased P80,000 of its par value bonds for P76,000. Interest payment dates are January 1 and July 1. Straight line amortization is used. What gain or loss on bond retirement should be shown in the consolidated income statement on December 31, 2009?

a. 4,000 gain

b. 5,600 loss

c. 2,000 loss

d. 2,400 gain

Reference no: EM132749104

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