CERTYNEX IFRS ACADEMY

Fiora SA renegotiates with its bank a borrowing with a carrying amount of 2,000,000 and incurs 40,000 of legal costs and fees. Case data: the 10 per cent test concludes that the new terms are not substantially different; the modification is therefore not accounted for as an extinguishment. How are the 40,000 treated?

As an immediate expense of the period, like routine administrative costs.

As an adjustment to the carrying amount of the modified borrowing, amortised over its remaining term.

In a gain or loss on extinguishment, as if the original borrowing were repaid.

As an asset, an intangible asset amortised over the term of the new contract.