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Corporate Backgrounder - Fiscal YE 2006
a. Became inactive in fiscal 2006
b. Has minimal tangible assets
c. Incurred and paid $5,000 in 2006 to have info package prepared for prospective buyers of the company
d. Sale price is basically comprised of a 300 KM government tenure for backcountry recreation.
e. Any costs relating to the tenure acquisition were expensed. Thus no value to this intangible item.
f. Listing price of company is in the millions. Tangible assets, receivables, etc., do not warrant this price.
f. At this date, October 2008 company is still for sale.
Q.
1. How would the $5,000 expenditure be correctly presented on the 2006 T2 financial statements? [ie: GIFI code(s)]
Thank you.
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T2 - Paid $$ in attempt to sell
MultiQuote
#2
JohnNP 
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Posted 29 October 2008 - 01:14 AM
Maggie-G, on Oct 28 2008, 03:39 PM, said:
Q.
1. How would the $5,000 expenditure be correctly presented on the 2006 T2 financial statements? [ie: GIFI code(s)]
1. How would the $5,000 expenditure be correctly presented on the 2006 T2 financial statements? [ie: GIFI code(s)]
financial statement correct presentation would be a matter for GAAP treatment
tax treatment would be determining which section of the income tax act applies
#3
dunner
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Posted 29 October 2008 - 01:01 PM
GENERALLY, it sounds like the $5000 is a capital expenditure. However, if it's a share sale that is being contemplated, then the $5000 could be treated as a shareholder appropriation since the company would not be the one benefiting from the sale. If it's an asset sale then, again generally, the cost could be a cost of disposing of the assets and would reduce the capital gain and/or recapture of cca.
#4
Maggie-G
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Posted 09 November 2008 - 09:46 PM
dunner, on Oct 29 2008, 05:01 AM, said:
GENERALLY, it sounds like the $5000 is a capital expenditure. However, if it's a share sale that is being contemplated, then the $5000 could be treated as a shareholder appropriation since the company would not be the one benefiting from the sale. If it's an asset sale then, again generally, the cost could be a cost of disposing of the assets and would reduce the capital gain and/or recapture of cca.
Thanks for your response Dunner! At the moment, only the tenure is up for sale. However, if an interested party wanted to buy the entire company, I'm sure the parties could come to terms. So, think I'll book the expense as a capital expenditure for now & won’t amortize.
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