Explain What an "In-Substance Defeasance" Is and Whether This Arrangement

question 8

Essay

Explain what an "in-substance defeasance" is and whether this arrangement results in the derecognition of a financial liability.

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Definitions:

SUTA Payable

A liability account in the general ledger that records amounts owed to the state unemployment insurance program, to be paid by employers.

Social Security Tax

A payroll tax paid by employees and employers to fund the Social Security program, which provides retirement, disability, and survivorship benefits.

Time Card

A record of the hours worked by an employee, used to calculate payroll and ensure compliance with labor laws.

Internal Control

Processes and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.