Kirkland Inc. is a software company operating in Montreal, QC. On 1 January 2021, Kirkland signed a note with RRBC to finance the opening of its new office in downtown.

The $4,000,000, 3 year note, has an interest rate of 5% (paid annually) with a due date of December 31, 2023. Currently, Kirkland has financial difficulties and will be unable to reimburse this note and two years of unpaid interest on the due date (31/12/2023). It approached the bank for concessions in beginning of December, 2023. Both parties adopted IFRS.

The bank and Kirkland have agreed on the following:

-The existing note will be replaced with a revised note bearing interest at 3% annually with a due date of December 31, 2026 and a face value of $3,700,000.

-The unpaid interest will be forgiven.

-Kirkland will convey to the bank a vacant storage building having a net book value of $20,000 and fair value of $50,000 as the renegotiation fee on December 31, 2023.

-The market rate of interest is 4%.

The determination of whether this re-financing is a major or minor settlement will involve comparing a value of the renegotiated debt plus payments made or asset given (storage building) with the amount of the obligation forgiven. These amounts as calculated respectively, will be (renegotiated debt - $; existing obligation forgiven $).

a.$3,518,489 and $4,000,000

b.$3,518,489 and $4,000,000

c.$875,490 and $4,400,000

d.$3,548,489 and $4,400,000

e.$3,498,483 and $4,400,000