Insubstance Debt Defeasance Is No Longer Allowed Under AASB 132

question 22

Multiple Choice

Insubstance debt defeasance is no longer allowed under AASB 132:

• A) Because this form of defeasance is no longer used in Australia.
• B) Because the new standard takes a form over substance approach.
• C) Because it is inappropriate to extinguish a debt where the discharge of the obligation has been accepted by the creditor.
• D) Because this type of action requires the offsetting of financial assets and liabilities in circumstances not allowed under AASB 1014.
• E) None of the given answers.

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Definitions:

Consumers

Consumers are individuals or entities that use or consume goods and services for personal use, not for manufacturing or resale.

Producers

Individuals or entities that create, manufacture, or grow products for the purpose of selling them to consumers or other businesses.

Price Support

Government interventions or policies designed to maintain the market price of a commodity or product at a certain level, usually to protect producers' incomes.

Price Floor

A government-imposed minimum price for a good or service, preventing the market price from falling below a certain level, potentially leading to a surplus.