Which of the Following Statements About Courts Determining the Materiality

question 39

Multiple Choice

Which of the following statements about courts determining the materiality of a breach is false?

• A)The standard for determining materiality is a flexible one that takes into account the facts of each individual case.
• B)A breach that occurs later in the parties' relationship is more likely to be viewed as material than is one that occurs early.
• C)They key question is whether the breach deprives the injured party of the benefits that he reasonably expected.
• D)Courts take into account the extent to which the breaching party will suffer forfeiture if the breach is held to be material.

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Definitions:

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal, used in inventory valuation and accounts receivable.

Write-Down

A reduction in the book value of an asset when its market price falls below its carrying value on the balance sheet.

Gross Profit

The difference between revenue and the cost of goods sold, representing the basic profitability of the products or services sold by a company.

Pretax Income

The income of a business before income taxes are deducted.