Ava Miller has just completed the second year of operating her veterinary clinic. You have been retained by Ava for tax assistance and advice. At a recent meeting, you gathered information on her practice, which is presented below.

For the year ended December 31, 2020, the clinic showed a profit of $123,700, as follows:

Professional service

$321,000

Gross profit from surgical instrument sales

28,000

$349,000

Administration and other expenses

(228,300)

120,700

Interest income

3,000

Net income

$123,700

Included in the above is depreciation/amortization expense of $23,000 on fixed assets and amortization of development costs of $4,400.Additional information for 2020 is outlined below.

1.On February 28, Ava purchased a competitor's business and merged it with her own. The following assets were acquired:

Truck

$18,000

Equipment

50,000

2.During the year, Ava designed and patented a new surgical instrument. On July 1, a legal fee of $4,000 was paid for the patent (life of 20 years) registration; this amount is included in administration expenses. In October, $16,000 was spent on consultants to research metal alloys, and this cost is being amortized as development costs in the financial statement.

3.Professional services revenue includes the value of unbilled services compiled from a work-in-progress file. At December 31, unbilled services amounted to $16,000, compared with $2,100 at the same time last year. In 2019, Ava had made an election under section 34 of theIncome Tax Actto exclude work in progress from income.

4.Some of the items included under administrative and other expenses are as follows:

Group life insurance for office staff

$1,100

Christmas gifts to staff (under $200 each)

1,400

Dues to golf club (for employee)

1,200

Meals and drinks for clients

400

Books (15-volume set on veterinary medicine)

3,000

Interest on car loan (six months)

2,100

Finder's fee for a loan to finance equipment

1,000

5.The income statement includes a cost of$3,150 for attending three conventions during the year. Convention #1 ($750) was in July. Conventions #2 ($1,350) and #3 ($1,050) were both in December. Each convention includes a cost of ($100) for meals. For each of the December conventions, the airfare of ($200)was included in accounts payable at the end of the year.

6.Vehicle costs include operating costs of $2,400 for the automobile (including $400 for car parking). The automobile was driven 24,000 km. Of this, 12,000 km was for customer travel, 2,000 km was for travel between her home and the clinic, and 10,000 km was for personal travel.

7.Ava expects that a number of the new manufactured surgical instruments will be returned for modification, which she will do at no extra cost to the customer. The income statement includes a $2,000 deduction based on her estimate of the returns. As of December 31, $800 of costs were incurred for returned items.

8.Ava moved from rented premises to new rented premises on February 28, with 20 months remaining on the old lease. The landlord accepted a payment of $8,000in exchange for cancelling the lease. The accounting records have amortized this cost over the remainder of the lease term and accordingly have deducted $4,000as rent expense.

9.Capital cost allowance (CCA) for tax purposes has been correctly calculated as $15,000.

Required:

Determine Ava'snet income from business for tax purposes for 2020 taxation year.