Which of the Following Is an Example of a Related

question 10

Multiple Choice

Which of the following is an example of a related party transaction?

• A)An action is taken by the directors of Company A to provide additional compensation for vice presidents in charge of the principal business functions of Company A.
• B)A long-term agreement is made by Company A to provide merchandise or services to Company B, a long-time, friendly competitor.
• C)A short-term loan is granted to Company A by a bank that has a depositor who is a member of the board of directors of Company A.
• D)A nonmonetary exchange occurs whereby Company A exchanges property for similar property owned by Company B, an unconsolidated subsidiary of Company A.

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Definitions:

Provincial Tax Brackets

Various income ranges within a province that are taxed at different rates, used to determine the amount of provincial income tax individuals owe.

Market Value

The current market price for buying or selling an asset or service openly.

Equipment

Tangible property used in operations, such as machinery and hardware, that contribute to the production or service of a business.

Inventory

A company's merchandise, raw materials, and finished and unfinished products which have not yet been sold; considered an asset on the balance sheet.