In-substance defeasance is sometimes used as a method of bond retirement.Choose the correct statement about this practice.
A)The firm may invest in any investment-grade debt security to retire the bonds as long as the investment securities are transferred irrevocably to a trustee
B)The process may require the company which issued the bonds to make substantial payments in addition to the investments purchased for the defeasance
C)The bonds are legally retired as a result
D)Neither the assets used to effect the defeasance, nor the bonds themselves, are reported in the balance sheet, even though the bonds remain outstanding

Question

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The Answer of In-substance defeasance is sometimes used as a method of bond retirement.Choose the correct statement about this practice.
A)The firm may invest in any investment-grade debt security to retire the bonds as long as the investment securities are transferred irrevocably to a trustee
B)The process may require the company which issued the bonds to make substantial payments in addition to the investments purchased for the defeasance
C)The bonds are legally retired as a result
D)Neither the assets used to effect the defeasance, nor the bonds themselves, are reported in the balance sheet, even though the bonds remain outstanding

In-Substance Defeasance Is Sometimes Used as a Method of Bond