Soap Company Issued $200,000 of 8%, 5-Year Bonds on January

Multiple Choice

Soap Company issued $200,000 of 8%, 5-year bonds on January 1, 20X6. The discount on issuance was $12,000. Bond interest is paid annually on December 31. On December 31, 20X8, Pumice Company purchased one-half of the outstanding bonds for $96,000. Both companies use the straight-line method of amortization.
What amount of gain or loss from retirement of debt will be reported on the 20X8 consolidated financial statements?

A) $1,600 gain
B) $1,600 loss
C) $1,200 gain
D) $1,200 loss