Luke Is a Director of Motor Parts Corporation

question 9

Multiple Choice

Luke is a director of Motor Parts Corporation.Luke makes decisions with respect to Motor Parts in good faith,in what he believes is the firm's best interest,and without violating any duties owed to it.If,despite these circumstances,Luke exercises poor business judgment,under the business judgment rule Luke is

• A)immune from liability.
• B)liable only to the extent that he gains as a result.
• C)liable only to the extent that Motor Parts suffers as a result.
• D)wholly liable.

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Definitions:

Jointly Controlled Operations

Business activities where control and management responsibilities are shared among two or more parties, often under a joint venture agreement.

Disclosure

The act of making financial information known to the public, typically through financial statements and other official reports, ensuring transparency and accountability.

Unrealised Profits

Earnings generated on paper from investments or sales yet to be finalized through actual transaction or cash exchange.

Joint Venture Investment Account

An account that records the initial and ongoing financial contributions made by the partners of a joint venture, adjusted for their share of profits, losses, and distributions.