Didde Company Issues $20,000,000 Face Value of Bonds at 96

Multiple Choice

Didde Company issues $20,000,000 face value of bonds at 96 on January 1, 2013. The bonds are dated January 1, 2013, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2016, $12,000,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2016?

A) $1,200,000 loss
B) $544,000 loss
C) $720,000 loss
D) $907,000 loss