The Existence of a Related Party Transaction May Be Indicated

question 8

Multiple Choice

The existence of a related party transaction may be indicated when another entity:

• A)sells real estate to the corporation at a price that is comparable to its appraised value.
• B)absorbs expenses of the corporation under audit.
• C)borrows from the corporation at a rate of interest which equals the current market rate.
• D)lends to the corporation at a rate of interest which equals the current market rate.

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Definitions:

Monthly Tenancy

A rental agreement where the lease is renewed on a monthly basis, allowing for more flexibility in tenancy duration.

Action

In legal terms, it refers to a lawsuit taken to court to enforce a particular right.

Distrain

The act of seizing someone's property in order to obtain payment of money owed, especially rent.

Covenant

A formal agreement or promise between two or more parties to do or not do something specified.