If an Express Warranty Is Breached

question 19

Multiple Choice

If an express warranty is breached:

• A) the warrantor is not liable if due care was exercised in the manufacture or handling of the product
• B) the seller has no warranty obligation if the buyer had the opportunity to inspect the goods before purchasing them.
• C) the warrantor is not liable if (s)he honestly believed that the warranty was true.
• D) the warrantor is always liable.

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Definitions:

Unrealised Intragroup Profits

Profits arising from transactions within a group of companies that have not yet been realized outside the group, often requiring elimination for consolidated financial statements.

Fair Value Adjustments

Adjustments to the reported value of an asset or liability to reflect its current market value.

Fair Value

The amount one would expect to receive from the sale of an asset or the cost to transfer a liability during a structured transaction among parties in the market as of the valuation date.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.