BC3.33 Paragraph 3.3.2 requires an entity to derecognise the original financial liability and recognise a new financial liability when there is:
(a) an exchange between an existing borrower and lender of debt instruments with substantially different terms; or
(b) a substantial modification of the terms of an existing financial liability or a part of it.
Paragraph B3.3.6 specifies that the terms are substantially different if the discounted present value of the cash flows under the new terms using the original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability (10 per cent test). Paragraph B3.3.6 requires an entity to include 'any fees paid net of any fees received' in the 10 per cent test.
BC3.34 The Board decided to amend paragraph B3.3.6 in response to a request to clarify which fees an entity includes in the 10 per cent test. The clarification aligns with the objective of the tes
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