Assignment Problem Thirteen - 7 (Comprehensive Corporate Tax Payable) Falko Ltd. is a Canadian controlled private corporation with a December 31 year end. For its year ending December 31, 2020, its accounting Net Income Before Taxes, as determined using gen- erally accepted accounting principles, was $1,029,700. Relevant information for the 2020 year necessary to make the appropriate reconciliation adjustments to Net Income For Tax Purposes, Taxable income, and federal Taxes payable is as follows. 1. Falko's amortization expense was $494,500. Maximum deductible CCA for the year was $713,000. Company policy has always been to deduct the maximum available CCA. 2. The company's revenues included foreign source investment income of C$44,000. The amount received, however, was only C$36,080 as a result of foreign withholding income taxes of 18 percent, or $7,920. The company only recorded the amount received as revenue. 3. Falko sold one of its buildings that required costly renovations in favour of leasing a building. The total sales price was $1,725,000 with $500,000 allocated to the land and $1,225,000 to the building. The original cost of the land and therefore its adjusted cost base was $650,000. The capital cost and adjusted cost base of the building was $1,000,000 and its UCC at the time of sale was $885,000. For accounting purposes the net book value of the building was $710,000. The company records accounting gains and accounting losses based on the net book value for the building and the original cost of the land. 4. During the year, the company earned the following amounts of Canadian source investment income, all of which have been included in net income for accounting purposes: Interest On Long Term Investments $28,700 Non-Eligible Dividends From A 100% Owned Subsidiary 77,500 Eligible Dividends On Bank of Nova Scotia Shares 53,300 5. Falko is only associated with one company - its wholly owned subsidiary Lands Inc. after acquiring all of its shares in 2016. Lands received a dividend refund of $26,475 as a result of the dividends paid to Falko in 2020. Since Lands' non-eligible RDTOH was insufficient to recover all of the dividend refund it was forced to partially rely upon its eligible RDTOH. Lands' GRIP account balance was nil at year end, preventing it from designating any of the dividends paid to Falko as eligible. Of the dividend refund, 43 percent was attributable to its eligible RDTOH and 57 percent to its non-eligible RDTOH. 6. Company expenses for accounting purposes included (1) $39,800 spent on business meals and entertainment; (2) a write-down of inventory (for obsolescence) beyond that permitted in valuing inventory for tax purposes; the excess amount is $11,400; (3) life insurance premiums totaling $14,375 paid on the life of two of the principal shareholders, and (4) bonuses to the same two shareholders for $75,000 each. The bonuses were never paid. Assignment Problem Thirteen - 7 (Comprehensive Corporate Tax Payable) Falko Ltd. is a Canadian controlled private corporation with a December 31 year end. For its year ending December 31, 2020, its accounting Net Income Before Taxes, as determined using gen- erally accepted accounting principles, was $1,029,700. Relevant information for the 2020 year necessary to make the appropriate reconciliation adjustments to Net Income For Tax Purposes, Taxable income, and federal Taxes payable is as follows. 1. Falko's amortization expense was $494,500. Maximum deductible CCA for the year was $713,000. Company policy has always been to deduct the maximum available CCA. 2. The company's revenues included foreign source investment income of C$44,000. The amount received, however, was only C$36,080 as a result of foreign withholding income taxes of 18 percent, or $7,920. The company only recorded the amount received as revenue. 3. Falko sold one of its buildings that required costly renovations in favour of leasing a building. The total sales price was $1,725,000 with $500,000 allocated to the land and $1,225,000 to the building. The original cost of the land and therefore its adjusted cost base was $650,000. The capital cost and adjusted cost base of the building was $1,000,000 and its UCC at the time of sale was $885,000. For accounting purposes the net book value of the building was $710,000. The company records accounting gains and accounting losses based on the net book value for the building and the original cost of the land. 4. During the year, the company earned the following amounts of Canadian source investment income, all of which have been included in net income for accounting purposes: Interest On Long Term Investments $28,700 Non-Eligible Dividends From A 100% Owned Subsidiary 77,500 Eligible Dividends On Bank of Nova Scotia Shares 53,300 5. Falko is only associated with one company - its wholly owned subsidiary Lands Inc. after acquiring all of its shares in 2016. Lands received a dividend refund of $26,475 as a result of the dividends paid to Falko in 2020. Since Lands' non-eligible RDTOH was insufficient to recover all of the dividend refund it was forced to partially rely upon its eligible RDTOH. Lands' GRIP account balance was nil at year end, preventing it from designating any of the dividends paid to Falko as eligible. Of the dividend refund, 43 percent was attributable to its eligible RDTOH and 57 percent to its non-eligible RDTOH. 6. Company expenses for accounting purposes included (1) $39,800 spent on business meals and entertainment; (2) a write-down of inventory (for obsolescence) beyond that permitted in valuing inventory for tax purposes; the excess amount is $11,400; (3) life insurance premiums totaling $14,375 paid on the life of two of the principal shareholders, and (4) bonuses to the same two shareholders for $75,000 each. The bonuses were never paid