medium · Financial Accounting liabilities-bonds-payable
Under IFRS 9, how is a modification gain or loss calculated for a financial liability that is modified but NOT extinguished?
- Difference between the original carrying amount and the PV of modified cash flows discounted at the original effective interest rate.
- Difference between the original carrying amount and the simple undiscounted sum of all new contractual cash flows expected.
- Difference between the original carrying amount and the present value of the new cash flows discounted at the current market interest rate.
- There is no such calculation to perform, because IFRS 9 categorically prohibits any gain or loss recognition unless the debt is fully extinguished.
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