Which of the Following Is True Regarding the Contention of ABC

question 21

Multiple Choice

Which of the following is true regarding the contention of ABC Insurance that it is not required to pay to Image Company the amount for which Bruno's life was insured?

• A) ABC Insurance Company is incorrect because Image Company held an economic interest in Bruno's life at the time the insurance was purchased.
• B) ABC Insurance Company is correct because Image Company no longer had an economic interest in Bruno's life.
• C) ABC Insurance Company is correct only if Bruno's new employer had purchased life insurance on his life.
• D) ABC Insurance Company is incorrect because Image Company had an economic interest in Bruno based on his possession of the jeep that Image Company still owned.
• E) ABC Insurance Company is incorrect only if Image Company owed Bruno retirement or some other sort of benefit.

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Definitions:

Written Down

A term referring to an asset that has been depreciated or devalued on the financial statements.

Carrying Value

The amount an asset is valued at on a balance sheet, subtracting depreciation and amortization.

Value Recovers

The process by which the market value of an asset increases after a period of decline.

Double Declining Balance

A method of accelerated depreciation which doubles the straight-line depreciation rate, resulting in higher depreciation expenses in the early years of an asset's life.