Question 1

When assessing the value of a corporation,the most relevant information that decision-makers normally consider is

Accepted Answer

A)  the potential for before-tax profits. 
B)  the potential for after-tax profits. 
C)  the current rate of corporate tax. 
D)  cash flow before-tax. 
A)  the potential for before-tax profits. 
B)  the potential for after-tax profits. 
C)  the current rate of corporate tax. 
D)  cash flow before-tax. B

Question 2

tax jurisdictions.List the relevant variables within these four categories.

Accepted Answer

Income: Business,Property,Employment,Capital Gains
Entities: Individuals,Corporations,Trusts
Forms of business: Proprietorship,Corporation,Partnership,Limited Partnership,Joint Venture,Income Trusts
Tax Jurisdictions: Provincial,Federal,Foreign

Question 3

ABC Corporation is in a 25% income tax bracket.John Adams is an employee at ABC.He is in a 40% tax bracket.The company has offered John a 10% pay raise.His current salary is $50,000.
Required:
A)Calculate the after-tax cost of the raise to the corporation.
B)Calculate the after-tax cost of the raise for John.
Show all calculations.

Accepted Answer

A)Actual cost to ABC: ($50,000 ×10%)×(1 - .25)= $3,750
B)Actual value for John: ($50,000 × 10%)× (1 - .4)= $3,000

Question 4

Two investor corporations may not enter jointly into which of the following?

Accepted Answer

A)  Joint venture 
B)  Partnership 
C)  Separate corporation 
D)  Proprietorship 
A)  Joint venture 
B)  Partnership 
C)  Separate corporation 
D)  Proprietorship

Question 5

Which of the following statements is false?

Accepted Answer

A)  Cash flow should be calculated on an after-tax basis. 
B)  The tax cost to a business should not be regarded as a cost of doing business. 
C)  Income tax should be considered a controllable cost. 
D)  The value of an enterprise should not be based on pre-tax cash flow. 
A)  Cash flow should be calculated on an after-tax basis. 
B)  The tax cost to a business should not be regarded as a cost of doing business. 
C)  Income tax should be considered a controllable cost. 
D)  The value of an enterprise should not be based on pre-tax cash flow.

Question 6

Which of the following statements is true?

Accepted Answer

A)  Payment of the return on equity is deductible by the corporation and is a form of property income for the individual. 
B)  Payment of the return on equity is deductible by the corporation and is a form of business income for the individual. 
C)  Payment of the return on equity is not deductible by the corporation and is a form of business income for the individual. 
D)  Payment of the return on equity is not deductible by the corporation and is a form of property income for the individual. 
A)  Payment of the return on equity is deductible by the corporation and is a form of property income for the individual. 
B)  Payment of the return on equity is deductible by the corporation and is a form of business income for the individual. 
C)  Payment of the return on equity is not deductible by the corporation and is a form of business income for the individual. 
D)  Payment of the return on equity is not deductible by the corporation and is a form of property income for the individual.

Question 7

Explain what is meant by the principle that tax should be treated as a 'controllable cost'.

Accepted Answer

Just as decision makers in business must

Question 8

Which of the following is not considered to be a separate entity for tax purposes in Canada?

Accepted Answer

A)  Individuals 
B)  Proprietorships 
C)  Corporations 
D)  Trusts 
A)  Individuals 
B)  Proprietorships 
C)  Corporations 
D)  Trusts

Question 9

Which of the following attitudes and actions will help decision-makers develop an efficient approach to taxation?

Accepted Answer

A)  Cash flows should be considered from a before-tax perspective when making decisions. 
B)  Functional managers should not be held responsible for the tax effects of decisions within their divisions. 
C)  Tax costs to a business should be regarded as controllable expenses, much like product costs and selling costs. 
D)  All managers should own a copy of the Income Tax Act. 
A)  Cash flows should be considered from a before-tax perspective when making decisions. 
B)  Functional managers should not be held responsible for the tax effects of decisions within their divisions. 
C)  Tax costs to a business should be regarded as controllable expenses, much like product costs and selling costs. 
D)  All managers should own a copy of the Income Tax Act.

Question 10

Income tax is calculated for which of the following jurisdictional groups?

Accepted Answer

A)  Municipal, provincial, and federal 
B)  Municipal, federal, and international 
C)  Provincial, federal, and international 
D)  Municipal, provincial, and international 
A)  Municipal, provincial, and federal 
B)  Municipal, federal, and international 
C)  Provincial, federal, and international 
D)  Municipal, provincial, and international

When assessing the value of a corporation,the most relevant information that decision-makers normally consider is

tax jurisdictions.List the relevant variables within these four categories.

Two investor corporations may not enter jointly into which of the following?

Which of the following statements is false?

Which of the following statements is true?

Explain what is meant by the principle that tax should be treated as a 'controllable cost'.

Which of the following is not considered to be a separate entity for tax purposes in Canada?

Which of the following attitudes and actions will help decision-makers develop an efficient approach to taxation?

Income tax is calculated for which of the following jurisdictional groups?

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Property-Capital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporations-An Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Trusts

Business Acquisitions and Divestitures-Assets Versus Shares

Business Acquisitions and Divestitures-Tax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Filters

Exam 1: Taxation-Its Role in Decision Making

When assessing the value of a corporation,the most relevant information that decision-makers normally consider is

tax jurisdictions.List the relevant variables within these four categories.

Two investor corporations may not enter jointly into which of the following?

Which of the following statements is false?

Which of the following statements is true?

Explain what is meant by the principle that tax should be treated as a 'controllable cost'.

Which of the following is not considered to be a separate entity for tax purposes in Canada?

Which of the following attitudes and actions will help decision-makers develop an efficient approach to taxation?

Income tax is calculated for which of the following jurisdictional groups?

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Property-Capital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporations-An Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Trusts

Business Acquisitions and Divestitures-Assets Versus Shares

Business Acquisitions and Divestitures-Tax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Filters