One of the requirements for setting off in AASB 132 is the intention to offset.Which of the following statements about the "intention to set off" is correct?
A) The intention to offset is only required where the legal right to set-off is disputed.
B) Without the intention to offset the past cash flows of the entity will not be affected.
C) The intention of both parties to settle is insufficient unless a legal right exists.
D) Must be stipulated in writing for it to apply under ASB 132.
E) None of the given answers.

Question

Quizplus · Accepted Answer

According to AASB 132, the intention of both parties to settle is insufficient unless a legal right exists, which means there must be both an intention and a legal right to set off. Option A is incorrect because the intention to offset is always required, regardless of whether the legal right is disputed or not. Option B is incorrect because the past cash flows of the entity will be affected whether or not there is an intention to offset. Option D is incorrect because stipulating in writing is not a requirement under AASB 132.

One of the Requirements for Setting Off in AASB 132