Cima F2 Exam Question No 37

Question No 37:

Determining the substance of a transaction?

Common features of transactions whose substance is not readily apparent are:

• The legal title to an asset may be separated from the principal benefits and risks associated with the asset
• A transaction may be linked with other transactions which means that the commercial effect of the individual transaction cannot be understood without an understanding of all of the transactions
• Options may be included in a transaction where the terms of the option make it highly likely that the option will be exercised.