At December 31, 2014, MIC had $20 million in 12% bonds payable, due in December 2018. The CFO recently returned from New York where he met with a couple of investment bankers and, based on those discussions, he believes that MIC can issue $20 million in new bonds to different investors bearing interest at 10%. The 12% bonds allow for prepayment by MIC beginning in 2014. Unamortized costs relating to the bonds total $500,000. The CFO estimates the investment banking, legal and accounting costs to execute the transaction should total $2 million.

A If this is considered an extinguishment of debt, the costs would be deferred and amortized over the life of the new bonds umder IFRS.

B If this is considered a debt modification of terms, under U.S. GAAP the costs would adjust the carrying value of the debt and be amortized over the remaining life of the bonds

C If considered an extinguishment of debt, the costs would be reflected in the gain or loss calculation under U.S. GAAP

D If this is considered a modification of terms, under IFRS the costs would be expenses as incurred.

E Assuming MIC goes forward with this transaction, this would be considered an extinguishment of debt.