financial instruments

hi sir i want to ask about this question

QUESTION = A 5% loan note was issued on 1 April 20X0 at its face value of 20 million. The direct cost of the issue were 500,000. The loan note will be redeemed on 31 March 20X3 at a substantial premium. The effective interest rate applicable is 10% per annum. At what amount will the loan note appear in the statement of financial position as at 31 March 20X2?

Correct Answer: $21,195,000
b/d (20m – 0.5m): $19,500$
Interest 10%: $1,950$
Interest paid (20m × 5%): $(1,000)$
Balance 31 March 20X1: $20,450$
Interest 10%: $2,045$
Interest paid (20m × 5%): $(1,000)$
Final Balance: $21,495$

I’m confused because I thought this aligns with the business model of ‘investment in debt instruments held for contractual cash flows,’ where initial recognition (b/d) is typically at fair value + transaction costs (which would be 20m + 500,000 = $20.5m).

But here, the $500,000 is subtracted from the face value. Why is this the case? In other practice questions I’ve done, transaction costs are usually added to the face value of the loan?