Ravi,an Art Collector,had Been Made a Standing Offer by a Gallery

question 13

True/False

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting.The gallery can successfully answer all of Ravi's case by raising the parol evidence rule.

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Definitions:

Process Costing

An accounting methodology used to allocate costs to units of production in industries where the production process is continuous.

Cost Of Production Report

A document that details the total cost and production quantities of a specific department or process within a manufacturing operation.

First-In, First-Out

A method of valuing inventory in which the first items bought or manufactured are the first ones to be sold or utilized.

Direct Materials

Raw materials that are directly traceable to the production of a specific good or service.