Managers May Be Motivated to Revalue Assets Where There Are

question 28

Multiple Choice

Managers may be motivated to revalue assets where there are common forms of debt covenants in place because:

• A) It loosens the covenant and allows the business to borrow more.
• B) Revaluing assets provides more relevant information for debt-holders to use when making decisions.
• C) Revaluing assets provides greater cash flows out of which to repay debt.
• D) Revaluing assets provides more relevant information for debt-holders to use when making decisions and provides greater cash flows out of which to repay debt.

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Definitions:

Trespass to Personal Property

An intentional interference with someone's personal property without the owner's consent.

Conversion

An unauthorized act that deprives an owner of personal property without their consent.

Trespass to Land

An unauthorized intrusion by a person onto land that is possessed by another, constituting a private nuisance or offense.

Airspace

The space above the earth's surface that is available for aircraft to fly in, which is regulated by both national and international laws.