AASB 132 Requires an Entity to Offset a Financial Asset

question 14

Multiple Choice

AASB 132 requires an entity to offset a financial asset and a financial liability and present the net amount in the statement of financial position when two conditions are satisfied.Conditions for offsetting are generally NOT satisfied when:

• A)financial assets and liabilities have the same primary risk exposure that involve different counterparties.
• B)financial assets are pledged as collateral for non-recourse financial liabilities.
• C)obligations are expected to be recovered from a third party because of claims under insurance contracts.
• D)all of the above situations.

---

Definitions:

Indebtedness

A financial condition in which an individual or organization owes money to another party.

Debenture

A type of long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.

Closely Held Corporation

A business entity owned by a small group of shareholders where shares are not publicly traded and often involve family members.

Without Restriction

A term indicating that something can be used, accessed, or done freely without any limitations or conditions.