[RTRGARTR]

On March 1, Green went to Easy Car Sales to buy a car. Green spoke to a salesperson and agreed to buy a car that Easy had in its showroom. On March 5, Green made a $500 down payment and signed a secu­rity agreement to secure the payment of the balance of the purchase price. On March 10, Green picked up the car. On March 15, Easy filed the security agreement. On what date did Easy’s security interest attach?

Per my study software, the answer is March 5, the date that the down payment was made and the security agreement was signed. However, I was under the belief that the answer was March 10, as this is the date that the secured party gave “value” aka the car. Am I an idiot here? Or am I correct and the answer is wrong.

Thanks for the help! – An Auditor

[mskcle]

Noticed this too a few weeks back and did not get clarification. Becker has March 10 and Ninja has March 5 I believe. I agree with you in thinking it would be March 10 based on the value (car) being given on March 10. Anyone else have a better explanation to this?

[RTRGARTR]

Interesting. I use neither of those, this answer came from Surgent. Interested to hear others thoughts.

[Anonymous]

Just to clarify, “value” was given on March 5th when Green paid $500 and signed the agreement for the balance owed. Do not confuse giving value with taking possession. This question seems ambiguous, which is probably why it is no longer used by the AICPA for exams. Since this question appears in many different test preps, it was released by the AICPA. The AICPA doesn't usually re-use the questions they release from what I have heard.

[YouCanDoIt]

For attachment, ALL 3 things must occur, and attachment occurs on the day the last item happens:
i. creditor assigns value < march 5th
ii. creditor records security agreement <march 5th “security agreement signed”
iii. debtor has either rights or possession of the car < march 10th

So, March 10th is when all 3 points have occurred.

FAR: 76
REG: Currently studying
AUD:
BEC:

[Author]

Replies