Question

What are the major categories of commercial damages?

•Research one category and discuss what accounting records you would need to gather in order to perform the damage calculation.

•Discuss the different approaches to damage calculations.

Given the facts presented above, what accounting and other information would you look at to assist management in evaluating possible damages?

Answer 1

Answer:-

Major Categories of Commercial Damages

Antitrust harms, emerging out of imposing business model

Loss of Profits because of break of agreement, or different business deficiencies.

Loss of Goodwill

Loss due to infringement of intellectual property.

Loss of Profits due to Breach of Contract.

Loss of Profits may be due to decline in sales after the occurrence of an event. A Jerkish fall in sales may not be sufficient to justify damages .There ought to decrease pattern to legitimize the harms. In this manner a non execution of an agreement or a deferred execution with diminished dimension of movement is where loss of Profits occur because of break of agreement. A few deals contracts may not be satisfied by any means. This is another case of rupture of agreement.

Further on the costs side also there may be breaches of contract which leads to reduced profits. Faulty goods delivered under contract, and further not replaced or partly replaced can reduce profits and increased costs bya significant figure.There are situations where organizations have needed to close down because of episodes demonstrating complete misfortune.

There are following records may be procured to perform damage calculation

Sales History before Incident

Sales History at other locations after Incident

Deals Projections before episode

Genuine deals information after episode

Deals information of equivalent business after episode

Variable expenses when episode

Calculation of Damages Different approaches

Out of Pocket Approach. Genuine esteem got v/s real esteem passed on. This methodology absolutely overlooks opportunity cost

Advantage of the Bargain approach. Harms are the cash contributed, as well as the premium, lost benefits, decrease in speculation.

loss of profits by direct method, refer agreement

loss of profits by yardstick, comparing other business or industry average

But for method comparing budgeted with actual.

A mix of Benefit of Bargain approach, and But for technique would be the best strategy to figure the misfortunes.

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