Which of the following is not one of the conditions that must be met to qualify as extinguishment of debt by in-substance defeasance?

Question

Quizplus · Accepted Answer

The conditions that must be met to qualify as extinguishment of debt by in-substance defeasance are (1) trust must own monetary assets that are essentially risk free, (2) cash inflows into the trust must approximately coincide with required cash outflows, and (3) there is no reasonable possibility that the debtor will be called on to make additional payments on the debt. Option C states that there is a reasonable possibility that the debtor will be called on to make additional payments on the debt, which is not a condition for in-substance defeasance. Therefore, option C is the correct answer.

Which of the Following Is Not One of the Conditions