Yamaguchi Inc purchases all the assets of Ito Inc. after months of negotiation. All of the assets acquired have fair market values in excess of their related tax values. Which of the following will NOT be a result of this transaction?

Question

Quizplus · Accepted Answer

When acquiring assets with fair market values in excess of their related tax values, it is common for the acquiring company to obtain a higher tax value for the assets transferred resulting in higher future CCA deductions (answer A). Goodwill can also be recognized and as a result, the acquiring company will be able to take CEC deductions in the future (answer B). However, the acquiring company will not be held liable for future tax reassessments of the company whose assets were acquired (answer C). This is because the tax liability remains with the company that originally owned the assets. Additionally, the non-capital loss carry forward of Ito Inc. will not be lost and can be utilized by Yamaguchi Inc. (answer D).

Yamaguchi Inc Purchases All the Assets of Ito Inc