John Entered into a Contract with Barb to Restore Barb's

question 36

Multiple Choice

John entered into a contract with Barb to restore Barb's antique Ford for $9,000.Because John owes his younger brother a large sum of money,John assigned,prior to notifying Barb of the assignment,his right to receive payment to his brother.John began the restoration,but quickly stopped working on the car.Because of this,Barb retrieved the car from John.Almost no restoration work had been performed.Which of the following is true in this situation?

• A) As a result of the assignment, John's brother is entitled to payment despite the fact that John did not perform the restoration.
• B) Because of the assignment, John's brother was responsible for John's performance.
• C) John's brother does not have a right to collect the $9,000 from Barb.
• D) Barb is obligated to allow John's brother to complete the restoration if he so desires.
• E) John's assignment of his right to payment without Barb's consent was improper and discharged John's duties under the contract.

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Definitions:

Expense Recognition

The accounting principle that dictates the timing of reporting an expense in the financial statements, ensuring expenses are recorded when incurred.

Revenue Recognition

The accounting principle that dictates the conditions under which revenue is recognized and recorded, often requiring that revenue is earned and measurable.

Implicit Rate

An interest rate that is indirectly indicated but not explicitly defined, often used in lease agreements to represent the lessor’s return.

Fair Value

The financial return from unloading an asset or the expense of reallocating a liability in a formalized negotiation among market counterparts at the point of evaluation.