When a Contract Anticipates Some Catastrophic Event, Such as a Riot

question 15

Multiple Choice

When a contract anticipates some catastrophic event, such as a riot, invasion, earthquake, or flood that will interfere with the performance of the contract, this is referred to as a

• A) force majeure clause.
• B) condition precedent.
• C) "subject to" clause.
• D) condition subsequent.
• E) frustration clause.

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Definitions:

Overhaul

A comprehensive inspection, maintenance, and repair process to restore equipment, machines, or systems to optimum working condition.

Extraordinary Repairs

Large, infrequent expenditures that extend the useful life of an asset beyond its original forecast.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an equal amount of depreciation each year over the useful life of an asset.

Accumulated Depreciation

The total depreciation of a tangible asset up to a specific date, reducing its book value.