The City of Frost has a 20-year debt outstanding. On the last day of the current year, this debt has an outstanding balance of $4.8 million and five years remaining until it is due. On that date, the debt is paid off early for $5 million. A new debt is issued (with a lower interest rate) for $5.4 million. How is the $200,000 between the amount paid and the outstanding balance of $4.8 million recognized on government-wide financial statements?
a. As an expense.
b. As a reduction in liabilities.
c. As a deferred outflow of resources on the statement of net position.
d. As an asset on the statement of net position.