The CFAI curriculum says that if a bond is redeemed before maturity, under IFRS the company may show loss/gain on debt extinguishment: Gain/Loss = Net book value of the bonds - the amount required to redeem bonds However, net book value includes also the bond issuance costs. Hence it seems that the gain is inflated / loss is diminshed by the issuance costs. This basically means that the higher the issuance costs, the more taxes is the company going to pay in case of a gain on an early redemption of its bonds. Is it correct? Can you see the logic behind it? Thanks!