A Purchaser Has Agreed to Purchase All of the Shares

question 7

Multiple Choice

A purchaser has agreed to purchase all of the shares of Rain Ltd., a CCPC.Rain Ltd.owns fifteen significant capital assets, all of which have appreciated in value.Which of the following statements is correct?

• A)The purchaser will obtain a cost base of the assets equal to their fair market values.
• B)Capital cost allowance will be based on fair market values of the assets for the purchaser.
• C)The sale will result in business income for the vendor.
• D)The purchaser will acquire the liabilities of Rain Ltd.

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Definitions:

Stopped Payment

is an instruction given to a bank by an account holder not to pay a check or transaction previously issued or arranged, usually due to disputes, errors, or lost checks.

$1,200 Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or to a specified person.

Negotiable Promissory Note

A written, legally-binding promise to pay a specified sum of money either on-demand or at a set time, which can be transferred to others.