First Bank Loaned $400,000 to Thomas,taking a Security Interest in His

question 10

Multiple Choice

First Bank loaned $400,000 to Thomas,taking a security interest in his yacht.Thomas defaulted on the loan and First Bank repossessed the boat.First Bank sold the yacht at a public sale.The sale yielded $50,000 more than the debt.First Bank

• A)must pay Thomas the $50,000.
• B)is entitled keep the $50,000.
• C)must share the $50,000 equally with Thomas.
• D)must pay the surplus to the Secretary of State.

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Definitions:

Current Assets

Assets that are cash or can be converted into cash within a year, including cash, accounts receivable, and inventory.

Amortized

The process of gradually writing off the initial cost of an asset over a period, or similarly, spreading loan payments over the loan term.

Amortization

Amortization is the process of gradually writing off the initial cost of an intangible asset over its useful life, reflecting its consumption or decline in value.

Intangible Assets

Non-physical assets such as patents, copyrights, and goodwill that have value to a business.