In a State That Has Adopted the Ultramares Rule and Uses

question 46

Multiple Choice

In a state that has adopted the Ultramares rule and uses the primary benefit test,who amongst the following may hold an accountant liable for common law negligence?

• A) Only the client.
• B) Only the client and a third party that the accountant knew would rely on the accountant's work for a particular purpose.
• C) Only the client.A third party that the accountant knew would rely on the accountant's work for a particular purpose,and others who are in the same limited class as that third party.
• D) Any third party that is a foreseeable user of the accountant's work may hold him/her liable if that third party suffers a loss as a direct result of the accountant's negligence.

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Definitions:

Purchased Goodwill

The intangible asset recorded when a company acquires another business for more than the fair value of its net identifiable assets, representing non-physical assets like reputation and brand value.

Conceptual Viewpoint

An approach or perspective based on abstract ideas or theories rather than on practical applications.

Intangibles

Assets that do not have physical substance but are still valuable because of their intellectual property or other value to the firm.

Expensed

The act of charging a cost as an expense in the income statement in the period it is incurred.