Lon Has Just Come Home from Serving in the Marines

question 9

Multiple Choice

Lon has just come home from serving in the Marines and contracts with a local car dealership to purchase a car.The car must be ordered and payment is to be made when the car arrives.The next day,Lon receives orders to return to active duty.Realizing that he doesn't need the car,he brings Tony to the dealership and asks that Tony substitute for him.Lon will take delivery and ownership of the car and Lon will pay the dealership upon delivery.The dealership agrees to have Tony substitute for Lon.What has occurred?

• A) an assignment
• B) a novation
• C) a delegation
• D) an accord and satisfaction

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Definitions:

Present Value Method

A technique used to determine the current worth of a future cash flow, considering the time value of money.

Business Combination

A transaction or event where an acquirer obtains control of one or more businesses.

Gain On Bargain

The financial gain realized when an asset is purchased below its fair market value.

Fair Value

The compensation received for parting with an asset or the expenditure in transferring a liability within a calm transaction among market actors at the date of assessment.