Your company has just purchased a large piece of property, and multiple creditors have a security interest in the property. This security interest must then be perfected, which sets forth the rights of a secured creditor against other creditors who also have a security interest in your property.
In an Excel spreadsheet that is 2 pages in length, create 2 charts (1 chart on each page).
The guidelines for the first chart are the following:
Create a list of the priority of creditors with regard to security interests when there are conflicting claims.
Which creditor is given preference, and why?
Discuss the creditors that follow in the chain.
The guidelines for the second chart are the following:
Depict a scenario with 4 different creditors that have a security interest in the property of a company.
Be sure to list next to each creditor the date of perfection if the security interest is perfected.
List, in order, the creditors. Create a column in which you explain why that creditor is in that place in the chain of priority.
How will the lien on the property be shown in the notes to the financial statements?