Which of the Following Hold True in a Case of Liquidated

question 60

Multiple Choice

Which of the following hold true in a case of liquidated damages?

• A) For liquidated damages to be lawful, the actual damages must be precisely determined.
• B) Liquidated damages are enforceable even if actual damages are later determined to be different.
• C) A liquidated damages clause is considered a penalty if actual damages are not determinable in advance.
• D) If a liquidated damages clause is found to be a penalty, it continues to be enforceable.

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Definitions:

Scrap Value

An asset's anticipated resale value once it has surpassed its period of utility.

Straight-Line Method

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

Scrap Value

The estimated resale value of an asset at the end of its useful life, typically considered as salvage value.

Double-Declining-Balance

A method of accelerated depreciation which doubles the regular depreciation rate, reducing the value of an asset more quickly in its early years.