A corporation called an outstanding bond obligation four years before maturity. At that time there was an unamortized discount of $1630000. To extinguish this debt, the company had to pay a call premium of $540000. Ignoring income tax considerations, how should these amounts be treated for accounting purposes?

Amortize $2170000 over four years.

Charge $540000 to a loss in the year of extinguishment and amortize $1630000 over four years.

Either amortize $1090000 over four years or charge $1090000 to a loss immediately, whichever management selects.

Charge $2170000 to a loss in the year of extinguishment.