ImaBigBank Has Extended an Operating Line of Credit to Vandenbergers

question 62

Multiple Choice

ImaBigBank has extended an operating line of credit to Vandenbergers Bulbs Ltd. In exchange, Vandenbergers had to provide an assignment of the corporation's accounts receivable from its seasonal city garden contracts. What is the bank's position?

• A) It acquired ownership of the right to collect the assigned accounts.
• B) It alone possesses the right to collect Vandenbergers' accounts.
• C) It is using a very uneconomical method of protecting creditor rights to pledged property.
• D) It acquired possession of an assignment without obtaining right of ownership.

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Definitions:

Translated

Converted from one language to another or, in financial terms, adjusted from one currency into another using the current exchange rate.

Remeasured

The process of adjusting the book value of a foreign subsidiary’s financial statements to reflect current exchange rates or the fair value of assets and liabilities.

Straight-Line Method

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

Functional Currency

The currency of the primary economic environment in which an entity operates, typically the currency in which it principally generates and expends cash.