Chapter 49 Personal Property and Bailments. All Answers

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N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question modified from the previous edition of the Test Ban... k. = A question included in the previous edition of the Test Bank. TRUE/FALSE QUESTIONS A1. Tangible personal property represents a set of rights and interests but has no real physical existence. F PAGE: 956 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A2. Generally, individuals are not required to pay annual taxes on personal property that is used for business. F PAGE: 956 TYPE: N NAT: AACSB Analytic AICPA Legal A3. Real property cannot be turned into personal property by detaching it from the land. F PAGE: 957 TYPE: N NAT: AACSB Analytic AICPA Legal A4. A trade fixture is personal property that is installed for a commercial purpose by a tenant. T PAGE: 958 TYPE: N NAT: AACSB Analytic AICPA Legal A5. Those who find lost property cannot acquire ownership rights through mere possession of it. F PAGE: 959 TYPE: N NAT: AACSB Analytic AICPA Legal A6. A gift is a voluntary transfer of property for which no consideration is given. T PAGE: 959 TYPE: N NAT: AACSB Analytic AICPA Legal A7. Delivery of intangible personal property must always be accomplished by actual delivery. F PAGE: 959 TYPE: N NAT: AACSB Analytic AICPA Legal A8. A gift causa mortis does not become absolute if the donor does not die. T PAGE: 961 TYPE: N NAT: AACSB Analytic AICPA Legal A9. Property voluntarily placed by its owner and inadver¬tently forgotten is abandoned property. F PAGE: 962 TYPE: + NAT: AACSB Analytic AICPA Legal A10. A finder of lost property can claim title to the property against the whole world—except the true owner. T PAGE: 962 TYPE: + NAT: AACSB Analytic AICPA Legal A11. A finder of lost property who knows the true owner and fails to return the property is guilty of the tort of conversion. T PAGE: 963 TYPE: N NAT: AACSB Analytic AICPA Legal A12. A bailment of real property is possible. F PAGE: 964 TYPE: N NAT: AACSB Analytic AICPA Legal A13. All transactions involving the delivery of property from one person to another create a bailment. F PAGE: 964 TYPE: N NAT: AACSB Analytic AICPA Legal A14. A bailment agreement can be express or implied. T PAGE: 965 TYPE: N NAT: AACSB Analytic AICPA Legal A15. In a commercial bailment, the bailee must exercise ordinary care. T PAGE: 966 TYPE: N NAT: AACSB Analytic AICPA Legal A16. In most bailments, the bailee can retain the goods given by the bailor and return equivalent property. F PAGE: 967 TYPE: N NAT: AACSB Analytic AICPA Legal A17. If the bailed property has been lost or is returned damaged, a court will presume that the bailee was negligent. F PAGE: 967 TYPE: N NAT: AACSB Analytic AICPA Legal A18. Property that is leased from a bailor must be fit for the intended purpose of the bailment. T PAGE: 969 TYPE: N NAT: AACSB Analytic AICPA Legal A19. The delivery of goods to a common carrier creates a relationship between the shipper and the carrier. T PAGE: 970 TYPE: N NAT: AACSB Analytic AICPA Legal A20. A hotel owner is always strictly liable for the safety of a guest’s automobile. F PAGE: 971 TYPE: N NAT: AACSB Analytic AICPA Legal MULTIPLE CHOICE QUESTIONS A1. Helen owns heavy construction equipment and the tools to service it, as well as office furniture, including computers. Ilya owns a number of pat¬ents, trademarks that identify the products made under those patents, and stock in the company that sells those products. Personal property in¬cludes the items owned by a. Helen and Ilya. b. Helen only. c. Ilya only. d. neither Helen nor Ilya. A PAGE: 956 TYPE: = NAT: AACSB Reflective AICPA Legal A2. Chita owns the land on which Downwind Farm is situated, plus the farmhouse, barn, and other structures permanently attached to the land. Chita’s brother Elmo owns everything else on the farm—implements, seed, and so on. The real property is owned by a. Chita and Elmo. b. Chita only. c. Downwind Farm. d. Elmo only. B PAGE: 956 TYPE: = NAT: AACSB Reflective AICPA Legal A3. Baksheesh owns a house. In the house, on a tile floor is a throw rug. Most likely to meet the definition of a fixture is a. the house. b. the throw rug. c. the tile floor. d. none of these choices. C PAGE: 957 TYPE: = NAT: AACSB Reflective AICPA Legal A4. Fanny buys clay to throw pottery, which is glazed and fired in a kiln. The finished products are sold to Gifte Shoppe, which sells these items and others to customers who often present them as gifts. The most common way to acquire personal property is to a. buy it. b. commingle it. c. produce it. d. receive it as a gift. A PAGE: 959 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A5. Rocco gives Sequoia a computer as a gift. Using the computer, Sequoia develops a new computer game, for which she obtains intellectual property protection, and forms Titan Games, LLC, to make and market the game. Sequoia’s ac¬quisition of the game is by a. gift. b. accession. c. confusion. d. production. D PAGE: 959 TYPE: + NAT: AACSB Reflective AICPA Legal A6. Ansel owns Bar-B Ranch. Ansel’s only son Cy owns Double-D Ranch in the same county. Ansel gives 90 percent of the Bar-B to Etta, a short-term employee. This gift a. may lack the required element of “donative intent.” b. may lack the required element of “donor’s acknowledgement.” c. may lack the required element of “heir’s acquiescence.” d. meets all of the requirements for an effective gift. A PAGE: 959 TYPE: = NAT: AACSB Reflective AICPA Legal A7. Kade and Lila each press certain quantities of olive oil to sell to Mediterranean Products, Inc., and agree to share storage costs until Mediterranean can take delivery. The oil is commingled so that Kade’s cannot be distinguished from Lila’s. This is a. accession. b. confusion. c. conversion. d. dominion. B PAGE: 961 TYPE: + NAT: AACSB Reflective AICPA Legal A8. Idaho Farms mistakenly puts its potatoes in Jackson Co-op’s storage bin, which already contains Kelly Spud Farm’s potatoes. It is impossible to tell which potatoes originally belonged to which party. This is a. a bailment. b. accession. c. confusion. d. production. C PAGE: 961 TYPE: = NAT: AACSB Reflective AICPA Legal A9. Floyd tells his daughter Glenda that she can have his Harley Davidson when he dies, but he does not add this to his will. This is a. a valid gift causa mortis. b. a valid gift inter vivos. c. a valid gift testamentary. d. not a valid gift. D PAGE: 961 TYPE: = NAT: AACSB Reflective AICPA Legal A10. Inadvertently, Morris leaves his backpack at NuWay Launderers when he stops to pick up his clothes. The backpack is a. abandoned property. b. gifted property. c. lost property. d. mislaid property. D PAGE: 962 TYPE: + NAT: AACSB Reflective AICPA Legal A11. Jennifer finds a full duffel bag that she believes may be subject to an es¬tray statute. Estray statutes apply to a. abandoned property. b. bailed property. c. lost property. d. mislaid property. C PAGE: 963 TYPE: = NAT: AACSB Reflective AICPA Legal A12. Emily checks her luggage at Flyaway Airlines’s ticket counter before boarding her flight to Houston. Subject to a bailment is a. Emily. b. Emily’s luggage. c. Emily’s ticketed seat on the flight. d. none of the choices. B PAGE: 964 TYPE: N NAT: AACSB Reflective AICPA Legal A13. Delacroix discovers a boat adrift, and retrieves and anchors it. The boat features a number on its side and other evidence pointing to its owner, Elvira. This is a. an involuntary bailment. b. a voluntary bailment. c. an express bailment. d. no bailment. A PAGE: 965 TYPE: N NAT: AACSB Reflective AICPA Legal A14. Mona asks Ned if she can store her furniture in his garage while she serves a tour of duty with the U.S. Marines Corps. Ned agrees. This is a bail¬ment for a. neither party’s benefit. b. the parties’ mutual benefit. c. the sole benefit of the bailee. d. the sole benefit of the bailor. D PAGE: 965 TYPE: = NAT: AACSB Reflective AICPA Legal A15. Jill loans her laptop to Kyle. This is a bailment for a. neither party’s benefit. b. the parties’ mutual benefit. c. the sole benefit of the bailee. d. the sole benefit of the bailor. C PAGE: 965 TYPE: = NAT: AACSB Reflective AICPA Legal A16. Sid borrows Tony’s paint sprayer to paint his house. Uma allows Vic to store his posthole digger in her shed. The party with a right to use the bailed property is a. neither Sid nor Uma. b. Sid and Uma. c. Sid only. d. Uma only. C PAGE: 966 TYPE: = NAT: AACSB Reflective AICPA Legal A17. Quint rents a riding mower from Rent-All, Inc. Quint leaves the mower in a remote location overnight. When he returns to retrieve it, it is gone. Liability for the loss most likely rests with a. Quint and Rent-All. b. Quint only. c. Rent-All only. d. neither Quint nor Rent-All. B PAGE: 967 TYPE: = NAT: AACSB Reflective AICPA Legal A18. Bob rents a golf cart at Country Club Golf Course. The brakes are worn, and while Bob is driving the cart, they fail. The cart crashes into a tree, and Bob is injured. Country Club could have discovered, with rea¬sonable diligence, that the brakes were worn. Liability for Bob’s injuries most likely rests with a. Bob and Country Club. b. Bob only. c. Country Club only. d. neither Bob nor Country Club. C PAGE: 969 TYPE: = NAT: AACSB Reflective AICPA Legal A19. Beta Company arranges to have Carrier Corporation, a common carrier, transport fifty HDTVs from New York to California. Dan is Carrier’s driver. Carrier will not be liable to Beta for failing to deliver the TVs on time if a. authori¬ties are stopping and searching all trucks entering California. b. Carrier’s dispatcher mistakenly delays Dan’s departure. c. Carrier’s truck is broken into and the TVs are stolen. d. Dan has to wait two days in Denver for the truck to be repaired. A PAGE: 970 TYPE: = NAT: AACSB Reflective AICPA Legal A20. Tab stores video equipment with U-Store-It, Inc., under a contract that excuses the warehouser from liability for any damage. A fire due to U-Store-It’s negligence destroys the equipment. The loss is most likely to be imposed on a. neither Tab nor U-Store-It. b. Tab and U-Store-It. c. Tab only. d. U-Store-It only. D PAGE: 970 TYPE: = NAT: AACSB Reflective AICPA Legal ESSAY QUESTIONS A1. During a storm on Blue Lake, a boat sinks, but its owner Cappy survives. Cappy plans to return to the site of wreck to salvage its equipment and his possessions, but he delays. Meanwhile, Dick, an amateur diver, discovers the wreck and strips it clean of useful items. Cappy learns of the recovery and files a suit against Dick, claiming that the items are his. Dick responds that the sunken boat was abandoned and therefore he has good title to whatever he took possession of. What is the court likely to rule, and why? A2. Frenchy’s Fast Fries (3F) requires that its employees wear uniforms and protective clothing while on the job. 3F provides a locker room for the employees to leave their street clothes and personal items while working. A sign on the back of the locker room door states, “Frenchy’s is not re¬sponsible for the loss of any property in the locker room.” Grant, a 3F employee, changes his clothes in the locker room before starting work and leaves his wallet and watch in a pocket of his jacket hanging in his locker. When he returns after his shift, the wallet and watch are gone. Does Grant’s leaving personal items in the locker room constitute a bailment? If so, what type of bailment? If not, what legal relationship is it? Does 3F’s sign exculpate the com¬pany for Grant’s loss? Why or why not? [Show More]

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