If the Collateral from One Loan Is Used to Secure

question 25

Multiple Choice

If the collateral from one loan is used to secure the obligations on another loan,this is called __________,or sometimes called a "__________" clause.

• A) perfection, default
• B) cross-collateralization, dragnet
• C) floating lien, dragnet
• D) attached loan, dragnet

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Definitions:

Straight-line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its expected useful life.

Salvage Value

Salvage value refers to the predicted value an asset will have when it is sold after reaching the end of its usability.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Machinery Retirement

Machinery retirement refers to the process of removing fixed assets, specifically machinery, from operational use due to obsolescence, age, or inefficiency.