Ontario Barrister and Solicitor Practice Exam

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Study for the Ontario Barrister and Solicitor Exam. Quiz with flashcards and multiple choice questions, each with hints and explanations. Prepare for your legal career!

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When is an asset sale preferable for a corporation?

If the corporation is filing for bankruptcy
If the corporation is CCPC qualified and earning an active business income
If the corporation is planning to liquidate all assets internationally
If the corporation is a non-profit

The correct answer is: If the corporation is CCPC qualified and earning an active business income

An asset sale is preferable for a corporation when it is a Canadian Controlled Private Corporation (CCPC) that is earning an active business income. This is because in this scenario, the corporation can take advantage of the capital gains exemption and resulting tax savings. Option A is incorrect because a corporation would not want to sell its assets during bankruptcy as it could result in more financial losses. Option C is incorrect because liquidating all assets internationally can be a complicated and potentially risky process for a corporation. Option D is incorrect because non-profit organizations do not typically have assets that can be sold.