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Humber College Exam 4: Invigilated Theory Sample Questions:

1. Asset sale and share sale are two different ways to sell a business. Which statement describes an asset sale?

A) The buyer replaces the seller as the owner of the corporation.
B) The buyer is eligible for tax deductions and benefits by claiming capital cost allowance on depreciable property.
C) The seller benefits from a tax standpoint since any gain to the seller on the sale will be considered under the capital gains tax exemption.
D) The buyer assumes all assets and accepts all liabilities of the business.

2. A salesperson is assisting both the tenant and the landlord in a commercial property rentaltransaction. Which of the following statements about calculating the remuneration for this transaction is correct?

A) Remuneration can be an agreed amount or a percentage of the rental price, but not a combination of both.
B) Salespersons are prohibited from indicating directly that remuneration is fixed by any association but can indicate it indirectly.
C) The tenant may be required to pay the deficiency between the contracted amount in the tenant representation agreement and the amount actually paid by the landlord.
D) Remuneration can be calculated based on the difference between the listing price and the actual rental price.

3. A tenant is interested in leasing a property; however, the tenant would like to make improvements to the property. Which of the following statements about tenant improvements is correct?

A) The tenant takes the premises in an "as is" condition and can complete whatever improvements they wish without landlord approval.
B) In a lease agreement, the tenant provides a list of improvements to the landlord and the landlord always pays for these improvements.
C) Unless indicated in the lease agreement, improvements attached to the leased building generally become the tenant's property upon vacating the premises.
D) The landlord may offer a "tenant improvement allowance" which provides funds to cover thecosts of tenant improvements.

4. Which of the following statements regarding heavy industrial use and light industrial use is correct?

A) Heavy industrial use can produce more pollution than other commercial activities.
B) Light industrial use usually results in more noise and heavier traffic.
C) Heavy industrial use usually results in less traffic in and out of the heavy industrial zone.
D) Clay production is an example of light industrial use.

5. A salesperson and their commercial seller client are discussing and preparing to list the seller's office building. The topic of defects comes up and the seller wants to know what the salesperson will have to disclose. Which of the following is an accurate statement regarding the disclosure of defects?

A) The salesperson should discuss patent defects known to the seller of the office building with the seller and disclose them to a buyer.
B) The salesperson should not disclose material latent defects that are known to the seller that could reduce the price or the marketability of the property.
C) The salesperson should discuss latent defects known to the seller of the office building with the seller and disclose them to a buyer.
D) The salesperson should not disclose latent defects that are known to the seller as they could affect the seller's ability to obtain a high price for the property.

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