FAR 4 Module 6

Question 1

How do we calculate the gain or loss from retirement of bonds?

Answer 1

Call price - (Face value of the bond + Unamortized bond premium)

Question 2

What happens if the settlement price is greater than the face value of the debt, and the face value is greater than the book value?

Answer 2

This would be a loss in continuing operations

Question 3

What would be the gain and loss for the

Restructuring of payables?

Transfer of real estate?

Answer 3

Restructuring of payables: Gain

Transfer of real estate: Loss

Question 4

What are callable bonds?

Answer 4

Question 5

How should the excess of the carrying amount of old debt over the amount paid to extinguish it be reported when a company refunds debt?

Answer 5

Question 6

What happens when a bond was issued as a premium but redeemed as a discount?

Answer 6

This would be a gain in income from continuing operations

Question 7

What is an in-substance defeasance and how does it affect bond liability?

Answer 7

Question 8

How is the gain/loss on extinguishment calculated?

Answer 8