A Firm Retired a Long-Term Note by In-Substance Defeasance

question 50

Multiple Choice

A firm retired a long-term note by in-substance defeasance.This means that:

• A) the creditors have been paid.
• B) the debtor has been released of its legal responsibility for all remaining debt payments.
• C) there is only a remote chance that the debtor will be required to make further payments on the liability.
• D) the debt is shown as an offset against the assets used to retire the debt, in the debtor's balance sheet.
• E) the debtor will continue to recognize interest expense on the debt but will make no more payments.

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Definitions:

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type, often used as inputs in the production of other goods or services.

Prices

The monetary value assigned to goods or services, representing the amount a buyer pays to a seller in a market transaction.

Income

The income earned, usually periodically, from labor or investment returns.

Prices

The sum of money anticipated, needed, or provided as payment for an item.