On January 1,2020, ABC Corporation issued a 5-year, 10%, 1,000 of the P 5,000 face value bonds with a yield of 12%. The bonds is payable after five years and interests is payable annually starting December 31,2020. Assuming 1/4 of the bonds were retired at 102 on December 31,2022 after payment of periodic interest, how much is the gain or loss on retirement of the bonds? (For present value factors, do not round off)   P  67,251.28 loss P 67,251.28 gain P  269,005.10 gain P  269,005.10 loss

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Q: please step by step answer.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.