When a No-Liability Company Defaults on Its Loans with Its

question 93

Multiple Choice

When a no-liability company defaults on its loans with its creditors,this means the:

• A) creditors have a legal claim against the directors only.
• B) creditors have a legal claim against the CEO only.
• C) creditors have a legal claim against the chairman of the company.
• D) shareholders do not have to meet any remaining payment on shares.

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Definitions:

Goodwill Impairment

A decrease in the recorded value of goodwill, indicating it is worth less than its carrying amount on the balance sheet.

FASB ASC

The Financial Accounting Standards Board Accounting Standards Codification, which is the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities.

Quantitative Assessment

The evaluation or measurement of something based on quantity or amounts.

Qualitative Assessment

An analysis method that focuses on non-quantifiable factors such as company quality, business model, governance, and risk factors.