Why Can't an Agent Take an Opportunity Meant for the Principal

question 74

Essay

Why can't an agent take an opportunity meant for the principal? When is an agent permitted to take such an opportunity? Give an illustration of an agent's violation of his or her duty of loyalty.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits or losses.

Segment Margin

The amount of profit or loss generated by a specific segment of a business, after accounting for the direct and traceable costs of the segment.

Segmented Income Statement

An income statement that separates financial information into segments, such as departments or products, to analyze each segment's profitability.

Absorption Costing

Absorption costing is an accounting method allocating all manufacturing costs to the product, including fixed and variable costs.