(Solution) - Barr Company acquires 60 10 5 year 1 000 Community bonds -(2025 Original AI-Free Solution)

Paper Details

Barr Company acquires 60, 10%, 5 year $1,000 Community bonds on January 1, 2010 for $61,250. This includes a brokerage commission of $1,250. If Barr sells all of its Community bonds for $62,500 and pays $1,500 in brokerage commissions, what gain or loss is recognized?
a. Gain of $2,500
b. Loss of $250
c. Gain of $250
d. Gain of $1,250
A bond is non-current liability. The interest paid on bond determined by bond?s face value (par value) along with its coupon rate or contract rate. Sometimes bonds sell at below than par value called at a discount or sell at above the par value called at a premium. The bond discounts or a premium means it reflects the adjustment of the bond price yield the required rate of return of market. To compete with new issues bonds sell at a premium rate or discount rate.