jawn619 Posted April 18, 2016 Share Posted April 18, 2016 Say a company's debt is trading at 50 cents on the dollar. The company has a extra cash and wants to buy $100M worth of bonds for $50M. How does this transaction effect the three statements? I am thinking CFI -$50M Income statement - Gain on purchase $50M Balance Sheet - decrease in long term debt of $100M Link to comment Share on other sites More sharing options...
rishig Posted April 18, 2016 Share Posted April 18, 2016 Say a company's debt is trading at 50 cents on the dollar. The company has a extra cash and wants to buy $100M worth of bonds for $50M. How does this transaction effect the three statements? I am thinking CFI -$50M Income statement - Gain on purchase $50M Balance Sheet - decrease in long term debt of $100M Yes, the line item is usually called "Gain (loss) on debt extinguishment" Link to comment Share on other sites More sharing options...
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