Chapter 8 Statements Flashcards
An investment corporation purchased an apartment building on March 31, 2003 for $2,800,000. Of that
$2,800,000, $1,700,000 was attributed to the building and $1,100,000 to the land. Depreciation was to be claimed at $50,000 per year for the life of the building. The building component of the property was valued on March 31, 2013, to be $2,400,000. What would be the net amount of the building appearing on the corporation’s Statement of Assets and Liabilities as at March 31, 2013?
(1) $1,700,000
(2) $1,200,000
(3) $2,400,000
(4) $1,900,000
2
which of the following would NOT be included in a statement of profit and loss?
(1) depreciation
(2) rental revenue
(3) current liabilities
(4) interest on mortgage
3
A statement of profit and loss measures:
(1) assets acquired during a certain period of time.
(2) revenues and expenses for a certain period of time.
(3) revenues accrued at a single point in time.
(4) assets and liabilities held at a single point in time.
2
Which of the following statements regarding trusts and real estate investment trusts (REITs) is FALSE?
(1) Beneficial owners are liable only for the amount committed to the purchase of the trust units.
(2) Income earned by a family trust is taxed at the tax rate of the youngest beneficiary.
(3) Family trusts allow a parent to deposit assets with a trustee and distribute the income to other members of the family.
(4) Mortgage trusts and equity trusts are two types of REITs.
2
Which of the following statements regarding capital cost allowance (CCA) is FALSE?
(1) Only one-half of the maximum allowable CCA may be claimed on an asset in the year the asset is purchased.
(2) No CCA may be claimed in the year of the asset’s disposal.
(3) The maximum CCA in a given year is equal to the depreciation expense multiplied by the CCA percentage.
(4) The CCA percentage rate is determined by the Canada Revenue Agency.
3
which of the following statement regarding limited partnerships is TRUE
- each limited partner is personally liable for all debts that the partnership incurs
- a limited partner can actively be engaged in managing the buisiness without any consequences to their partnership status
- income is taxed before it is distributed to the partners
- there must be one or more general partners
4
which of the following statements regarding common shareholder of a corporation is true?
- they do not have th right to elect the board of directors
- they share directly in the income of the company
- they are not permited to receive dividends
- they are liable only for the value of the shares purchased or agreed to be purchased
4
