The Conditions That Were Required by the Former AASB 1014

question 25

Multiple Choice

The conditions that were required by the former AASB 1014 to be satisfied in order to achieve an insubstance debt defeasance using a trust include:

• A) Irrevocably transfer risk-free assets to a trust, the trustees of which are independent, and remain independent, of the entity, and which is solely used for administering those assets so as to meet the servicing requirements (both interest and principal) of the debt.
• B) The assets transferred to the trust must be of an amount and type suited to the amount and timing of both the principal and interest servicing requirements.
• C) Irrevocably transfer risk-free assets to a trust, the trustees of which are controlled by the entity, and which is mainly used for administering those assets so as to meet the servicing requirements (both interest and principal) of the debt.
• D) Irrevocably transfer risk-free assets to a trust, the trustees of which are independent, and remain independent, of the entity, and which is solely used for administering those assets so as to meet the servicing requirements (both interest and principal) of the debt and the assets transferred to the trust must be of an amount and type suited to the amount and timing of both the principal and interest servicing requirements.
• E) The assets transferred to the trust must be of an amount and type suited to the amount and timing of both the principal and interest servicing requirements and irrevocably transfer risk-free assets to a trust, the trustees of which are controlled by the entity, and which is mainly used for administering those assets so as to meet the servicing requirements (both interest and principal) of the debt.

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