When an Entity's Management Resolves That the Entity Will Offer

question 30

Multiple Choice

When an entity's management resolves that the entity will offer to repair a defect it has recently discovered in one of its products,even though the nature of the defect is such that purchasers of the product would not expect the entity to do so:

• A) it must immediately recognise a liability.
• B) it must immediately recognise a liability, if it can be measured reliably.
• C) it will never recognise a liability as the offer to repair was not part of the contract of sale.
• D) it will only need to recognise a liability when the entity makes the offer public, or commits itself in some other way to make the repairs.

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Definitions:

Market Level

The current status or position of prices, stocks, or commodities within a particular market.

Systematic Risk

Market-wide or market segment-specific dangers that cannot be eliminated by diversifying one's investment portfolio.

Beta

Beta is a measure of a stock's volatility in relation to the overall market, indicating the stock's risk level compared to the market average.

Non-diversifiable Risk

A type of risk that is inherent to the entire market or market segment and cannot be eliminated through diversification.