Which statement describes the property exposure considerations for bailees?

Which statement describes the property exposure considerations for bailees?

• A. Only owned property
• B. Both owned and third-party property
• C. Only third-party property
• D. None

Answer: (B)

Bailees must account for two kinds of property exposure: their own property used in the business and the property of others that is entrusted to them. The key risk is the facility’s responsibility for goods kept, stored, or processed for customers, as well as the losses that could occur to the bailee’s own equipment, building, and inventory used to provide those services. For example, a dry cleaner’s equipment and facility can suffer damage, and the customers’ garments in the cleaner’s care can be lost or damaged. Because both types of property are at risk in a bailees' operations, the correct view is that property exposure covers both owned and third-party property.

Bailees must account for two kinds of property exposure: their own property used in the business and the property of others that is entrusted to them. The key risk is the facility’s responsibility for goods kept, stored, or processed for customers, as well as the losses that could occur to the bailee’s own equipment, building, and inventory used to provide those services. For example, a dry cleaner’s equipment and facility can suffer damage, and the customers’ garments in the cleaner’s care can be lost or damaged. Because both types of property are at risk in a bailees' operations, the correct view is that property exposure covers both owned and third-party property.