Humber College Exam 4: Invigilated Theory Sample Questions:

1. A retail property buyer must consider the parking requirements associated with the site. All of the statements below are considerations for parking, EXCEPT:

A) Parking may be impacted by the municipality's parking bylaw.
B) Required parking for persons with disabilities is usually fixed as a ratio based on the number of disabled persons in the community.
C) There may be minimum width and depth requirements for parking spaces.
D) Parking may be impacted by zoning requirements.

2. In regard to the adjusted book value/asset valuation method of valuing a business, which of the following is correct?

A) A company's adjusted book value is entirely unrelated to its net worth.
B) The adjusted book value method should not be used when the sale of a business is being implemented or is under consideration.
C) A company's adjusted book value should be equal to the actual market value of the business.
D) The adjusted book value method takes goodwill into account when establishing the value of a business.

3. A salesperson sells an office building using the Commercial Agreement of Purchase and Sale along with a schedule that lists all the fixtures, chattels, and rental items of the office building. After closing the real estate transaction, a dispute arises between the seller and the buyer about which chattels, fixtures, and rental items of the office building were to be included and which were to be excluded. Which of the following is NOT an accurate statement regarding the salesperson's actions related to negotiating chattels, fixtures, and rental items?

A) The salesperson should clearly describe and list the fixtures and chattels in the Agreement of Purchase and Sale and mark each item as an exclusion or inclusion.
B) The salesperson should specifically exclude all fixtures that are not a part of the transaction since fixtures are considered a part of the property and are normally included in the purchase price.
C) The salesperson should clearly list all rental items and service contracts, as these will not be included in the purchase price of the real property being purchased.
D) The salesperson should specifically exclude all chattels that are not a part of the transaction since chattels are considered a part of the property and are normally included in the purchase price.

4. Which of the following is a reason why an owner might consider redeveloping an industrial property?

A) The cost of relocating is low.
B) A similar building can be bought at a low price.
C) The existing building no longer provides the highest and best use of the site.
D) A redevelopment will seriously disrupt the current operation.

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

A) The buyer is eligible for tax deductions and benefits by claiming capital cost allowance on depreciable property.
B) 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.
C) The buyer assumes all assets and accepts all liabilities of the business.
D) The buyer replaces the seller as the owner of the corporation.

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