Which of the Following Statements Is True Regarding the Disposal

question 10

Multiple Choice

Which of the following statements is true regarding the disposal of shares by a shareholder?

• A) When a shareholder sells shares to other shareholders, the corporation's capital base increases.
• B) The sale of shares to other shareholders is known as a 'buy-back'.
• C) The sale of shares to the corporate treasury is not allowed in the Income Tax Act.
• D) The sale of shares to the corporate treasury may result in a deemed dividend and a capital gain or loss to the shareholder.

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Definitions:

Double Declining Balance

A method of accelerated depreciation which doubles the depreciation rate of the straight-line method, resulting in higher depreciation expenses in the earlier years of an asset's life.

Intangible Assets

Non-physical assets that hold value, such as patents, trademarks, and goodwill.

Intangible Assets

Non-physical assets that possess value due to their intellectual or non-material nature, such as patents, trademarks, and goodwill.

Depreciation Method

A systematic approach used to allocate the depreciable amount of an asset over its useful life, such as straight-line or declining balance methods.