Insubstance Debt Defeasance Was Defined in the Former AASB 1014

question 28

Multiple Choice

Insubstance debt defeasance was defined in the former AASB 1014 as:

• A) A type of legal defeasance in which a designated third entity assumes responsibility for the debt or a suitable legal arrangement is created to ensure that the debt is serviced and this is guaranteed by the debtor entity.
• B) A defeasance, other than a legal defeasance, in which the debtor effectively achieves release from the primary obligation for a debt by placing in trust assets that are adequate to meet the servicing requirements (both interest and principal) of the debt or by having a suitable entity assume responsibility for those servicing requirements.
• C) A defeasance, including a legal defeasance, in which the debtor effectively achieves release from the requirement to meet the interest and principal repayments on a debt by arranging for a suitable entity to assume the debt.
• D) A defeasance where the substance of the arrangement is equivalent to a legal defeasance in that the primary obligation for the debt is assumed by a designated third party with the knowledge and permission of the lender.
• E) None of the given answers.

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Definitions:

Tunica Media

The middle layer of the wall of a blood vessel, composed primarily of smooth muscle and elastic tissue.

Smooth Muscle

Involuntary, non-striated muscle found in the walls of internal organs and blood vessels, controlled by the autonomic nervous system.

Arteries

Blood vessels that carry oxygenated blood away from the heart to the body's tissues.

Arteriosclerosis

The thickening, hardening, and loss of elasticity of the walls of arteries, often leading to restricted blood flow.