McKenzie Worked in a Service Station

question 139

Multiple Choice

McKenzie worked in a service station. Changing a customer's tire, he over-inflated it, causing it to explode. This severely injured his left hand. Neither the tire nor the rim was found to be defective. In a lawsuit against the tire manufacturer McKenzie will likely:

• A) lose due to product abuse
• B) win under a strict liability or a negligence standard
• C) lose under strict liability but win under negligence
• D) win due to implied warranty of safety
• E) lose due to assumption of the risk

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Definitions:

Long-Lived Asset

A long-lived asset is a tangible or intangible asset with a useful life of more than one year, used in the operating activities of a business, such as buildings, machinery, or patents.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net assets.

Fair Value

An estimate of the market value of an asset or liability, based on current prices in an active market.

Net Assets

The total assets of a company minus its total liabilities, indicating the company's financial health and value.