$(38$ Minutes$)$

ABC Ltd$.$ is a Canadian private company and is a HST registrant. For the year ended December $31,$

$2023,$ the financial statements of ABC, prepared in accordance with GAAP, showed net income after

income taxes of $$325,000.$ The following amounts were deducted in determining the financial

statement net income.

Income tax expense $-$ $$150,000.$

Contributions to various registered charities $-$ $$6,000$

Amortization expense $-$$$160,000$

Advertising expense $-$ $$30,000$ for advertising in the Detroit, USA newspaper. The

advertising was directed at selling the company's products in the north eastern part of

the United States.

Warranty reserve $-$ $$38,000.$ The company provides warranties on several of its

products. The reserve is calculated as a flat percentage of sales for $2023.$

Meals and entertainment $-$ $$18,000$

The company leases a car for the president of the company for use in carrying out her duties of

employment as well as for personal use. The total $2023$ lease payments were $$18,000$ before the

HST tax. There are no refundable deposits associated with the lease and the lease payments do not

include any amounts for insurance or licensing. The lease commenced January $1,2023.$ In January $2023,$ the company paid landscaping costs of $$52,000$ that were expected to have a

useful life of $10$ years. These costs were capitalized for accounting purposes and are being

amortized on a straight line basis over a period of $10$ years. This amortization is included in the

amortization expense of $$160,000,$ above.

On November $8,2023,$ the company issued new common shares. The legal and accounting fees

related to this issue of shares were $$20,000.$ For accounting purposes, these costs were capitalized

to the balance sheet as intangible assets. This amortization is included in the amortization expense

of $$160,000,$ above.

The following items were also expensed in the income statement:

Loss from theft by an employee who worked in the Inventory department $$19,000$

Cost incurred in connection with negotiations for a new bank loan $$9,000$

Cost incurred in connection with the acquisition of shares of another company $$15,000$

The maximum CCA for the year has been correctly determined to be $$290,000$

Required:

Calculate the business income for tax purposes for $2023.$ Indicate why you have not included any of

the above items in your calculation. Assume that business income is the company's only source of

income.