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

Multiple Choice

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