Mary borrowed $125,000 from First Bank to buy a small ring that had once belonged to Catherine the Great. The bank kept a security interest in the ring, and took possession of the ring until the loan was paid. This transaction is an example of a pledge. Group of answer choices True False
Added by Priscilla R.
Step 1
A pledge is a type of security interest where personal property is transferred to a lender as collateral for a loan. The borrower retains ownership of the property but the lender has the right to possess it until the loan is repaid. Show more…
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Milt borrowed $200 from Anne. He promised to pay her back in two weeks. As a showing of his good faith, he agreed verbally that Anne could take possession of his baseball card collection and keep it until he had repaid the loan in full. The next day, after Anne had the baseball card collection in her possession, Orin heard that Milt was in need of money. Knowing that Milt's baseball card collection could be worth a great deal of money in a few years, Orin offered to purchase the collection from Milt for $150. Milt accepted the offer, took Orin's money, and promised to retrieve the collection from Anne and deliver it to Orin the next day. Anne, however, refused to give up possession of the collection until she was paid in full. Both Milt and Orin now take the position that Anne has no rights in and to the collection because she does not have a signed security agreement and she has not filed a financing statement.
Lottie A.
A bank will not require security in the form of collateral as a guarantee the loan will be repaid. True False
Pavitr A.
Steven Light bought a $55,050 wedding ring for his wife, Sherri Light, on credit from Royal Jewelers, Inc., a store in Fargo, North Dakota. The receipt granted Royal a security interest in the ring. Later, Royal assigned its interest to GRB Financial Corp. Steven and GRB signed a modification agreement changing the repayment terms. An attached exhibit listed the items pledged as security for the modification, including the ring. Steven did not separately sign the exhibit. A year later, Steven died. Royal and GRB filed a suit in North Dakota state court against Sherri, alleging that GRB had a valid security interest in the ring. Sherri cited UCC 9-203, under which there is an enforceable interest only if "the debtor has authenticated a security agreement that provides a description of the collateral." Sherri argued that the modification agreement did not "properly authenticate" the description of the collateral, including the ring, because Steven had not signed the attached exhibit. The court issued a judgment in GRB's favor. Sherri appealed. Issue: Was GRB's security interest in the ring valid and enforceable? Decision: Yes. The North Dakota Supreme Court affirmed the lower court's judgment. Questions to answer: Do you agree or disagree with the decision that was made by the courts? Why or why not? Why do you think Sherri felt that she was able to appeal? Was her decision impractical? Why? What implications do you think his death should have since he gave Sherri the ring as a gift? Should she still be responsible to pay the remaining balance? Discuss the ethical implications that you believe are at play with this case.
Akash M.
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