Fast Inc. designs, manufactures and distributes high$-$end commercial packaging. Fast Inc. operates out of two manufacturing facilities, one in Toronto specializing in paper$-$based products and one in Kingston that specializes in packing peanuts and plastics.

With consumers becoming more environmentally conscious, the demand for single use plastics has been decreasing. In response, Fast Inc. has started making preparations to sell off its plastics division. The plan is to transfer all the assets relating to the plastics business to a new corporation, Green Holdings $($GH$),$ until a buyer can be found for the division.

The chart below summarizes the relevant tax information for the various assets of the plastics division.

FMV ACB UCC

Cash $ $100,000$ $ $100,000$ $ $-$

Inventory $ $250,000$ $ $245,000$ $ $-$

Accounts receivable $ $60,000$ $ $70,000$ $ $-$

Land $ $1,500,000$ $ $750,000$ $ $-$

Building $($class $1)$ $ $1,000,000$ $ $800,000$ $ $300,000$

Manufacturing equipment $($Class $53)$ $ $800,000$ $ $1,200,000$ $ $900,000$

Goodwill $($class $14\mathrm{.}1)$ $ $500,000$ $ $-$ $ $-$

REQUIRED:

Explain which account$($s$)$ SHOULD NOT or CANNOT be transferred to GH using Section $85$ election and why? If a particular asset$($s$)$ should be transferred under another section of the Act, please provide which Section, and explain the rationale for relying on that other section?

Fast Inc. intends to transfer all assets except for the cash, accounts receivable and manufacturing equipment to GH using Section $85.$ Determine:

$1)$ The elected amount for each asset as well as the maximum non$-$share consideration $($i$.$e$.$ note receivable$)$ and share consideration Fast Inc. should take back on the transfer

$2)$ The adjusted cost base and paid$-$up capital of the preferred shares received by Fast Inc. on the transfer

$3)$ The ACB, Capital Cost and UCC if applicable of Goodwill to GH following the transfer.

Note:

You are required to show the full calculation $($including the applicable components$)$ in order to earn full marks

You are not required to reference legislation in Income Tax Act