Asked by Jasmine Renteria on May 07, 2024
Verified
The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds.
Loss On Redemption
A financial loss experienced when redeeming bonds or securities before their maturity date for a price higher than their face value.
Carrying Value
The book value of an asset or liability on a company's balance sheet, calculated as its original cost minus any depreciation, amortization, or impairment costs.
- Acquire knowledge about the process of bond issuance, redemption, and the consequent effects on a corporation's financial wellbeing and credit score.
Verified Answer
FA
Faizan AslamMay 13, 2024
Final Answer :
True
Explanation :
This is correct. The carrying value of the bonds represents the book value of the bonds on the issuing company's balance sheet, and the cash paid represents the actual amount of money paid to bondholders upon redemption. If the cash paid is less than the carrying value, the issuing company will experience a loss on bond redemption.
Learning Objectives
- Acquire knowledge about the process of bond issuance, redemption, and the consequent effects on a corporation's financial wellbeing and credit score.