A Purchaser Has Agreed to Purchase All of the Shares

question 4

Multiple Choice

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

• 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 higher asset values for the purchaser than was the case for the vendor.
• C)The sale will result in business income for the vendor.
• D)The purchaser will be responsible for the liabilities of Tee Co.

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Definitions:

Tender Offer

A public offer by one firm to directly buy the shares from another firm.

Target Firm's Management

The executives and administrators of a company that is the object of a merger or acquisition.

Merger

A merger is a corporate strategy that involves combining two or more companies into a single entity, often aiming to achieve growth, increase market share, or gain competitive advantages.

Individual Assets

Individual Assets are specific, identifiable pieces of property or resources owned by an individual or entity, which have value and can be used to meet debts or commitments.