I have a Mini-case from my Research in Accounting class. For an expert in accounting, this should be really simple. Any thoughts would be greatly appreciated!

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Toughyear Tire Co. has a $75 million loan from West Bank of the Mississippi. In fiscal 2006, Toughyear, because they had a tough year, failed to meet certain of the loan covenants set forth in the debt agreement. To cure the covenant violation, West Bank agreed to loosen the covenant provisions (lowering the EBITDA targets) for the next 5 years. Toughyear, in return for the amendments, agreed to pay $1 million to the lender plus a ¼ % increase in the interest rate to be paid on the loan during the remainder of the loan term. Toughyear also paid $100,000 in legal fees to Dewey, Cheatum and Howe to assist with the legal aspects of the modifications to the terms of the loan. The Company has determined that the present value of the future cash flows will be approximately 8% higher than they otherwise would have been, absent the loan modifications.

How should Toughyear account for the $1 million paid to the bank, the ¼ % increase in the interest rate and the $100,000 paid to the attorneys?
Cite and interpret the authoritative sources of the accounting literature to support your conclusion.