Which of the Following Is True of the Rule of Priorities

question 42

Multiple Choice

Which of the following is true of the rule of priorities regarding the disposal of a debtor's property when the debtor defaults?

• A) Persons who become lien creditors before or after the security interest is perfected win.
• B) If the security interest was perfected at the time of filing for bankruptcy, the bankruptcy trustee can take the collateral.
• C) The Bankruptcy Act provides that a bankruptcy trustee can avoid a transfer of an interest of the debtor in property to or for the benefit of a creditor.
• D) A perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods.
• E) A mortgage has priority over a perfected security in fixtures, even if the security interest is a purchase-money security interest.

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Definitions:

AASB 141

Refers to the Australian Accounting Standard on Agriculture, guiding on the accounting for agricultural activity including the recognition and measuring of biological assets.

Biological Assets

Living plants or animals that are used in agricultural activities from which agricultural produce is harvested, accounted for under specific accounting standards.

Fair Value

An estimate of the price at which an asset or liability could be exchanged in a current transaction between willing parties.

AASB 141

An Australian Accounting Standards Board standard that concerns agriculture, detailing the accounting for agricultural activity including the transformation of biological assets (living plants and animals) into agricultural produce.