Why Are "Disguised Gift" Promises Involving Nominal Consideration Nonbinding Because

question 15

Essay

Why are "disguised gift" promises involving nominal consideration nonbinding because of the absence of consideration? Explain with one example.

---

Definitions:

Useful Life

The estimated time period that an asset is expected to be used before it is fully depreciated or deemed no longer useful.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting standards and procedures that companies must follow when they compile their financial statements.

Accounting Estimate

Approximations or judgments made by management when preparing financial statements, due to uncertainty in determining the exact amounts.