Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

J Inc. is a Canadian-controlled private corporation that conducts its business in Canada. The sole shareholder, Jimmy, is considering selling the company and would like

J Inc. is a Canadian-controlled private corporation that conducts its business in Canada. The sole shareholder, Jimmy, is considering selling the company and would like to know if J is a qualified small business corporation (QSBC).

The fair market value of the assets is listed below:

image text in transcribed

The relative values of the assets and liabilities have not fluctuated during the past 24 months. During that time, Jimmy has been the only shareholder.

Required:

Determine if J Inc. is a qualified small business corporation. Determine whether each of the QSBC tests is met. Assume the cash does not constitute "excess cash" and is instead an asset used in an active business. Show all calculations and briefly explain your conclusion. Do you have any recommendations for Jimmy?

Cash $1,000.00 Accounts receivable Marketable securities Delivery vehicles Equipment Goodwill 8,000.00 14,000.00 16,000.00 18,000.00 36,000.00 $93,000.00 -8,000.00 $85,000.00 Accounts payable Net fair market value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel

8th Edition

1260881245, 9781260881240

More Books

Students also viewed these Accounting questions

Question

If the job involves a client load or caseload, what is it?

Answered: 1 week ago

Question

Learning is a good thing for everyone. Discuss.

Answered: 1 week ago

Question

What should be the role of managers in HRD?

Answered: 1 week ago

Question

What should be the role of government in HRD?

Answered: 1 week ago