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Aznanalyst83
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Posted: 12 Jul 2009 at 02:42 \| IP Logged

On February 28, 2006, Master, Inc. had total assets with a fair market value of $1,200,000 and total liabilities of $990,000. On January 15, 2006, Master made a monthly installment note payment to Acme Distributors Corp., a creditor holding a properly perfected security interest in equipment having a fair market value greater than the balance due on the note. On March 15, 2006, Master voluntarily filed a petition in bankruptcy under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. One year later, the equipment was sold for less than the balance due on the note to Acme.
Master's payment to Acme could:

A. Be set aside as a preferential transfer because the FMV of the collateral was greater than installment note balance

B. Be side asisde as a prefernential transfer unless acme showed master was solvent on Jan 15.1991

C. Not be set aside as a preferential transfer because Acme was over secured

D. Not set aside as a preferencial transfer if Acem showed master was solvent on march 15, 1991.

While I know the answer is C, I was curious on how does year 1991 one came into play. Is it because there is a law written back then that specify things, or Becker just got lazy and got the date wrong?

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Nan - Louisiana
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Posted: 12 Jul 2009 at 11:15 \| IP Logged

Which version of Becker are you using?

Answers B and D should have said 2006. This was an old released question which appears to have been updated either for appearances' sake or because some of the original question's wording was incorrect under current law (there was a big change to bankruptcy law in 2005).

Next time you see a question like this, rather than posting it here for your fellow struggling students to wrestle with and guess on, you should log onto your Becker account and use "Ask Becker a Question." You'll get an authoritative answer from a real Becker CPA within 24 hours. You may also get directed to a Becker Update which you had overlooked, which contains other critical corrections as well.

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Aznanalyst83
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Posted: 12 Jul 2009 at 16:14 \| IP Logged

You don't have to be mean about it =/

Thanks though.

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Nan - Louisiana
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Posted: 12 Jul 2009 at 17:40 \| IP Logged

Not trying to be mean at all, and didn't intend for it to be taken that way. Lots of Becker students don't realize there is a Becker update website where they can log in and ask questions.

http://beckerkb.custhelp.com/

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