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Cary and Elle Bronson had been married for 15 years when trouble arose in their marriage. Cary’s long hours of working had taken a toll on it; he was rarely around even for family functions. The last straw came when Elle found lipstick on the collar of Cary’s shirt and the unmistakable scent of a very expensive woman’s perfume; this wasn’t the first time she had noticed the telltale signs of what appeared to be a clandes¬tine affair. The next day, Elle visited an attorney to begin divorce proceedings. After some small talk, the attorney, Mark Smithson, asked Elle about the major assets accu¬mulated during the marriage. “Oh, there are the cars—a Jeep Cherokee, a Chevy Suburban, and a Bentley,” she answered. “A Bentley?” he queried, somewhat surprised. “Yes,” said Elle. “Our restaurant, The Roasted Duck, has done very well over the years. We began the business with almost nothing and both worked there until Karen, our second child, was born. At that point, I became a stay-at-home mom and left every¬thing to Cary.” “I’ve eaten at The Roasted Duck—the food is excellent,” Mark said. “Thank you,” replied Elle. “Is this the only source of income for you and your husband, Mrs. Bronson?” he asked. “Yes, other than some interest and dividends,” she answered. She and the lawyer discussed other matters pertaining to the divorce. He told Elle that he would obtain information from Cary’s attorney so that an equitable division of assets could occur and the issue of the custody of their children would be settled. Two weeks later, Elle received a call from Mark. Through the discovery process, Cary’s attorney had submitted a valuation of the restaurant that seemed unusually low and had not listed any other assets that could account for the house and vehicles that the Bron¬sons had acquired and the private education that they had provided for their children. “That can’t be right!” Elle exclaimed. “Well, it certainly doesn’t look right,” Mark said, “I’ll look into this some more and let you know what I find.” After he hung up the phone, Mark called Cary’s attorney. “This value placed on the restaurant doesn’t make any sense. What’s your take on this?” After a short pause, the attorney replied, “Cary told me that the restaurant business is not doing well and, thus, the value has declined.” After Mark hung up the phone, he pondered the situation: There must be an answer to this mystery. One thing’s for sure; if Cary isn’t telling the truth, he might as well change the name of his restaurant to The Cooked Goose.

What evidence (i.e., physical, documentary, and observational) could be collected to determine whether the valuation is correct?

How could you go about collecting this evidence?

Assume for a moment that the valuation is correct.

What other sources of money could Cary have to maintain his family’s lifestyle?

How would you test your theories?

Answer 1

What evidence (i.e., physical, documentary, and observational) could be collected to determine whether the valuation is correct?

The classic technique that could be followed is place an ad in the newspaper for the buyers and see what value comes up (observational)

Another technique could be to hire a professional valuer to the property to seek the valuation (documentary)

Visit place and see whether it is running well or not, how is the food, what the regular customers saying about it (physical)

How could you go about collecting this evidence?

Evidence of whether the valuation is correct or not is to see the rationale behind the amount suggested and do over the process followed for the valuation by Cary. Also, look over the income tax returns and the assets disclosed

Assume for a moment that the valuation is correct. What other sources of money could Cary have to maintain his family’s lifestyle?

Interest and dividend income along with job or opening up a new restaurant from the savings or alimony.

How would you test your theories?

Write down the estimated expenses per month at the minimum level. Determine the income from passive sources of interest and dividend. Ascertain the gap and look for what type of employment can Elle do to birdge the gap. If Elle can work hard to start a new restaurant from scratch considering she has an experience to do so and afford to make her savings been invested in it she may open restaurant or else the job