Question

A company that has filed a Chapter 11 bankruptcy petition intends to pay an insider key employee an inducement to remain with the company. The average amount of similar payments made to nonmanagement employees will be $35,000 in the same calendar year. Which of the following annual monetary incentives can be paid to this employee?A. $335,000B. $355,000C. $395,000D. $375,000

Answer 1

Answer:

A. $335,000

Explanation:

A Chapter 11 Bankruptcy is used when the company thinks to continue the business over liquidating it. This clearly calls for payments to employees.

As the key employees deserves to get the money, for this  there is a certain limit as prescribed is of 10times of the amount given to non-management employees.

Here the total amount which can be paid is $35,000 [tex]\times[tex] 10 = $350,000

Thus, total that can be given here = $350,000 at maximum.

Thus, the feasible option is $335,000.