[Anonymous]

I’m going through the Business Structure MCQs in Wiley 2012 testbank and found a conflicting answer to what is in the NINJA notes.

Question ID: BSTR-0034

R has agreed to purchase stock of J corp. Which of the following types of consideration or value is (are) sufficient to purchase this stock?

I. Services already performed by R.

II. Services promised by R to be performed at a later date

III. Negotiable promissory note to pay cash.

Wiley says I, II and III. However, I answered I only, because the NINJA REG Notes say cash, property and prior services performed are valid consideration. BUT promises to pay or perform services is not valid.

Anyone else catch this?

[jeff]

This bugged me, so I spent a good 45 minutes researching this.

I believe Wiley is correct. Future services used to not be valid consideration, but now many states (including Delaware Corps) are allowing the flexibility.

Nice job – you're the first person in 2 years to spot this.

I will change the ninjas…appreciate the heads-up.

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Anonymous]

THANK YOU Jeff for the follow up, I really appreciate it. And now I will definitely remember this for the exam!

[posty]

I just ran into this problem too and wondered the same thing. Good thing I saw this thread. Thanks Chup and Jeff!

FAR - 78 (10/3/11)
AUD - 83 (11/28/11)
REG - 70 (4/7/12), 84 (7/31/12)
BEC - 75! (5/31/12)
Ethics - 98

DONE

[Author]

Replies