Which of the Following Is Not Typically Used to Defer

question 6

Multiple Choice

Which of the following is not typically used to defer taxes in business reorganizations?

• A) Transfer of non-depreciable assets at their fair market values, from one corporation to another.
• B) Transfer of shares at their adjusted cost base, from one corporation to another.
• C) An amalgamation
• D) Transfer of depreciable assets at their undepreciated capital costs, from one corporation to another.

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Definitions:

Implicit Costs

The opportunity costs that arise from using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Normal Profit

The lowest amount of profit a company must earn to stay competitive and cover its opportunity costs.

Implicit Costs

Implicit costs, also known as imputed or opportunity costs, are the costs of resources owned by the firm that are used in its own production process.

Explicit Costs

Direct, out-of-pocket payments for wages, rent, materials, and other inputs in the production process.