On Its December 31, 2020 Statement of Financial Position, Mackeral

Multiple Choice

On its December 31, 2020 statement of financial position, Mackeral Ltd. reported bonds payable of $ 500,000. The bonds had been issued at par. On January 2, 2021, Mackeral retired one half of the outstanding bonds at 101 plus a call premium of $ 20,000. Ignoring income taxes, what amount should Mackeral report on its 2021 income statement as loss on extinguishment of debt?

A) $ 22,500
B) $ 20,000
C) $ 2,500
D) $ 0