Help Required:

Please refer to the questions and appendixes below. I need help with calculating taxable income and aggregate investment income for the company's 2020 year-end (please see required items highlighted in bold). Please note that the company is Canadian, thus any explanations and references has to be made based on the Canada Revenue Agency guidelines and ITA.

Actual Question:

It is April 1, 2021. You, CPA, have just met with Jenny Ellis, the CFO of Home Decor Inc. (HDI), a new client. Your tax consulting firm will be preparing HDI's corporate tax return this year. Jenny provided you with financial statements and other information needed to prepare the return (Appendix).

In Excel, prepare a calculation of HDI's taxable income for the year ended December 31, 2020. In addition, determine aggregate investment income (AII) included in each of net and taxable income of HDI for the year ended December 31, 2020. For the purposes of this analysis, assume that the gain on the sale of the land is a capital gain.

Appendix I: Income Statement Data

Appendix Home Decor Inc. Tax information Extracts from statement of prot and loss For the year ended December 31 Sales Cost of sales, excl uding depreciation Gross prot Operating expenses: Selling and general operating General and administrative Depreciation and amortization Operating income Other income {expenses}: Interest and other income Interest and other expenses Earnings before taxes Income taxes expense {recovery} Net income Retained earnings, beginning of gear Net income Dividends Retained earnings, end of year [in $'s} 22 {unaudited} $19,643 13 1'55 5 1383 'l 3,335 33? 232 4 455 'I' 1,423 23? {125} 1,535 211 5 1,324 $ 2,333 1,324 $ 393? 21119 {audited} $15,151} 1[I El4 ; 4 568 I 2,333 333 131 3 41? ; 1,143 118 {2'2} 1,135 211 $ 1,329 9134 [1513! $ 2863 \fAppendix {continued} 1. The following were included in selling, general, and administrative expenses: Charitable donations $ 3,000 Reserve for potential merchandise theft ?,500 Season tickets to the local junior hockey team used for business 2,000 Staff Christmas party 4,500 Green fees for goif games Iwith customers 4,000 Dinners attended with customers 3,250 . The following were included in interest and other income: Taxable Canadian dividends of$10,000 from public corporations. HDI owns 40% of Kids Place Inc. (KPI) common shares- Equity income of $35,000 on this investment is included in other income. During the year, HDI received a $12,000 noneligible dividend from KPI- KPI received an $13,000 dividend refund in the year. Interest income includes $9,000 on an investment in bonds and $1,200 from overdue trade accounts receivable. Temporary investments were sold for $53,500, resulting in a gain on sale of $14,000 based on the difference between the selling price of the investments and the net book value of those investments of $30,500. The investments originally cost $20,400- There was an unrealized holding gain on temporary investments of $8,200. A gove mment grant of $05,400 to assist with the cost of purchasing the new manufacturing facility {see n\"capital assets" below} was recognized in other income. 3. The following were included in interest and other expenses: There were brokerage fees of $2,000 on the sale of temporary investments noted above- $350 of interest was paid to the Canada Revenue Agency {CHM for the late payment of taxes. Legal fees of $2,500 were incuned to negotiate the terms of a debenture to nance the acquisition of the new manufacturing building (information provided below]- Append ix {continued} 4. Capital assets: The undepreciated capital cost of the assets owned by HDI as at December 31, 2019, was as follows {after the 2010 capital cost allowance claims}: |Glass 1 Note1 |Glass El other lGlass 10 Note 2 |Glass 53 Note 3 Note 1 The ISlass 1 building and associated land were sold in the year for proceeds of $620,000- The net book value of the land and building was $590,000, and the accounting gain is included in other income. Sixty percent of the selling price was allocated to the land, and the remainder is attributable to the building. The original cost ofthe building was $3?0,000, and the original cost of the land was $350,000. Prior to the acquisition of a new manufacturing facility, this was the only lGlass 1 building owned by HDI. During the year, HDI paid $1,240,000 to acquire a new property that is used 92% of the time for manufacturing purposes. The cost allocated to the building was $T94,000, and the remainder of the cost was allocated to the land. Note 2 During the year, HDI traded in an old delivery truck. A new deliveryti'uck was acquired for $34,500 net of a trade-in value of $9,300 for the old delivery truck. No gain or loss was reported on the disposal of the old delivery truck because the trade in value was equal to the net book value. Note 3 The manufacturing equipment was acquired in 2018 prior to the introduction of the Accelerated Investment Incentive.