Overview of the Situation:
LALUPON Plc issued a 10% debenture bond with an amount of ₦100m. Due to a series of defaults in servicing the loan, the bondholder provided waivers for payment deadlines, extending the maturity of the debt. LALUPON Plc classified the loan as a long-term debt in its financial statement on December 31, 2014, based on the waivers granted by the bondholder.

Accounting Treatment:

1. Initial Recognition of Debt:
   • Upon issuance of the debenture bond, LALUPON Plc should have initially recognized the bond as a financial liability at amortized cost, including the principal and any related transaction costs. The bond amount was ₦100m with a 10% annual interest rate.
2. Default and Waiver in 2013:
   • When LALUPON Plc defaulted on servicing the bond, the crystallization clause in the indenture came into play, allowing the bondholder to call for full repayment (principal + interest). However, the waiver granted by the bondholder in 2013 postponed the payments until December 2014.
   • The waiver meant that the loan was no longer considered in default, and LALUPON Plc should continue to recognize the bond as a financial liability. The accounting treatment at this stage is to continue recognizing the debt as a non-current liability unless further defaults or changes occur.
3. Further Waiver in 2014:
   • A second waiver was granted by the bondholder in June 2014, extending the payment until December 2015.
   • This waiver implies that LALUPON Plc was not in default, and the loan remains as a non-current liability (long-term debt) in the statement of financial position. The bondholder’s consent to the waiver indicates that LALUPON Plc can continue to classify the debt as long-term, and no immediate reclassification or impact on the financial liability is required.
   • The waiver should be treated as a modification of terms rather than a cancellation of the debt. The company continues to recognize the debt at amortized cost unless the modified terms represent a substantial change, in which case LALUPON Plc would need to assess whether to recognize a gain or loss.
4. Presentation in the Financial Statements (2014):
   • As of December 31, 2014, the bond was not in default, and the bondholder had issued waivers. Therefore, LALUPON Plc correctly classified the loan as a long-term debt in its statement of financial position.
   • This classification is appropriate because, even though the debt was originally due within a year, the waivers provided by the bondholder effectively deferred the payment. The loan is not in default at the reporting date and is considered a non-current liability.

Conclusion:
The accounting treatment of the waiver events is as follows:

• LALUPON Plc should continue to recognize the bond as a financial liability at amortized cost and classify it as long-term debt.
• The waivers granted by the bondholder do not require immediate reclassification of the liability or any change in the financial statement presentation.
• The loan remains as a non-current liability as the bondholder did not call for redemption, and the debt is not considered in default as of December 31, 2014.