Name and discuss the two categories of warranties.
What will be an ideal response?
The first type of warranty is an express warranty. It arises from a statement by the seller about the product to the buyer. The second type of warranty is an implied warranty. It is a warranty that exists without the seller affirmatively saying anything. Implied warranties include the warranty of merchantability and the warranty of fitness for the purpose intended. Both express and implied warranties may be disclaimed under UCC provisions if certain conditions are met; however, a limitation on personal injury damages may not be validly made.
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Which of the following is/are not true regarding inventories when their replacement cost declines below acquisition cost?
a. Both U.S. GAAP and IFRS require firms to write down inventories when their replacement cost, or market value, declines below acquisition cost. b. Accountants refer to the inventory as impaired and to this valuation as the lower-of-cost-or-market basis. c. The journal entry to record the inventory impairment results in a loss and a new balance sheet carrying value that is the lower of cost or market value. d. U.S. GAAP permits firms to recognize subsequent value increases, as long as the new value remains less than the original acquisition cost. e. IFRS permits firms to reverse previous impairments, up to the amount of the original acquisition cost of the inventory, if the circumstances that caused the inventory impairment no longer exist.
A target corporation is a corporation being acquired through the purchase of a substantial number of the voting shares of its stock
Indicate whether the statement is true or false
The purpose of country-of-origin marking requirements is to give consumers in the marketplace the information they need about the products they purchase
Indicate whether the statement is true or false
Which of the following statements is incorrect?
A. S corporation losses can offset shareholder income from other sources. B. S corporation income is taxed to shareholders when earned. C. S corporations must allocate income and expenses to their shareholders based on their proportionate ownership interest. D. The number of S corporation shareholders is unlimited.