Fact Pattern 19-1 General Leasing Company (GLC) Buys Equipment for Use as Inventory,borrow-Ing

question 57

Multiple Choice

Fact Pattern 19-1
General Leasing Company (GLC) buys equipment for use as inventory,borrow-ing $1 million from Helpful Finance Corporation for a security in-terest in the equipment.The next day,GLC borrows $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 19-1.Suppose that Helpful perfects its se-curity in-ter-est when GLC takes possession of the equipment.In that cir-cum-stance,the party with pri-ority to the collateral on GLC's default would be

• A)GLC
• B)Helpful and Interstate proportionately.
• C)Helpful only.
• D)Interstate only.

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Definitions:

Unearned Revenue

Money received by a company for goods or services not yet delivered or provided; often considered a liability.

Classified Balance Sheet

A financial statement that organizes a company's assets, liabilities, and shareholders' equity into subcategories, providing a detailed snapshot of the company’s financial health at a specific point in time.

Property, Plant, And Equipment

Long-term assets vital to business operations and not easily converted into cash, including land, buildings, and machinery.

Current Liabilities

Current liabilities are financial obligations a company needs to pay within one year, including accounts payable, short-term loans, and other similar debts.