In Lieberman V

question 75

Multiple Choice

In Lieberman v. Wyoming.com, LLC, Lieberman dissociated from the LLC and demanded cash for his share of the company. The remaining members voted to continue the company, and the operating agreement discussed distribution in the case of dissolution but not simple dissociation. The court decided that:

• A) fundamental common law rules of fairness should apply and Lieberman was due a fair share to be decided by independent business analysts.
• B) Lieberman had rightfully dissociated from the company but since the operating agreement was silent as to distribution should the company continue, he forfeited all rights upon dissociation and should receive nothing.
• C) because the operating agreement was silent on the issue, the Uniform Limited Liability Company Act controlled and Lieberman should get his initial investment back but nothing above that.
• D) Lieberman had rightfully dissociated from the company but since the operating agreement was silent as to distribution and state LLC law was also silent regarding the issue, Lieberman should get no distribution for dissociation but would retain his interest in the company until dissolution occurs.

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Definitions:

Units Transferred

The quantity of items moved from one stage of production to another, or from the production department to finished goods inventory.

FIFO Method

An inventory valuation method where it is assumed that the first items placed in inventory are the first sold, standing for "First-In, First-Out."

Weighted-Average Method

An inventory costing approach that averages the cost of goods available for sale for the allocation of cost of goods sold and ending inventory.

Ending Inventory

The aggregate worth of all products ready to be sold at the conclusion of a fiscal period.