Courts Will Consider the Adequacy of the Consideration When

question 22

Multiple Choice

Courts will consider the adequacy of the consideration when:

• A) one party clearly has the better of the deal.
• B) one party has more business experience than the other.
• C) one party claims to have been defrauded.
• D) one party shows a much lower price nationally-advertised on television.

Understand the purpose and composition of consolidated financial statements.

Distinguish between held-to-maturity securities, trading securities, and available-for-sale securities.

Grasp the concept of unrealized gains and losses and their implications.

Learn how to account for investments where the investor has significant but not controlling influence.

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Definitions:

Business Model Test

The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows.

Cash Flows Characteristics Test

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest.

Financial Asset

An intangible asset deriving value due to a contractual claim, such as cash, stock, bonds, and bank deposits.

Objective Evidence

Objective evidence refers to information, facts, or data that can be quantifiably measured or verified, uninfluenced by feelings, interpretations, or bias.