ITA: 12(1) 18(100), 18 Problem 9 Source Renovations Ltd. specializes in home renovations and interior design in the Montreal area. Most of the construction and finish carpentry work is subcontracted to self-employed contractors. The following information relates to the corporation's net income for the year ended July 31. 14,875 Ch 1/Study Guide Assignment Pro Sales revenue Direct contracting General and administrative Salary to poc h Meals and entertainment (Note) Advertising expenses Note ) Travelling expense (Note) Interest and bank charges (Noted) Amortisation (Note ) Ofice expenses TRO 000 0.000 Total expenses... . R 500 $ 121.400 Net operating profil Other Gain on sale of real estate (Note Sale of design contracts (Note .... 19.000 Net income ......... .....$ 196,400 able of $14.500 for a renovation project Ginny informed you that there was one unrecorded c completed on July 30 Notes: (a) Meals and entertainment includes: Club dues ............. Promotional meals and season hockey tickets .5 1,800 10,400 $12.200 Total ... (b) Advertising expenses include: $2,200 Charitable donations..... Community promotion ...... Local advertising and mail outs. 650 2,050 $4.900 Total ........ (c) Travelling expense includes both air travel and travel reimbursement to employees for business travel. The company's policy is to reimburse employees 58 cents per kilometre for the business use of their automobiles. The employees drove less than 5,000 kilometres. 106 500 $ 9,400 prior your corporate tax 8100 $18,000 laten e Th Total method of amortization. The maximum capital cost allow y purchased two homes. After Ginny redecorated, the corporation ronit. The corporation has sold six homes in the last two years using the The uses the straight-line method of amortization. The movie ance that may be claimed is $8,000 (During the year, the company purchased two home sold the homes for a profit. The corporation has same strategy involvement in e of design contracts resulted from Ginny's desire to downscale her involvement in wrial design. The gain on sale is net of all costs and expenses and is considered to be a capital gain. The salary to Ginny's spouse is considered reasonable because he spends most of his working day administering her business, The controller of Source Renovation Ltd. has asked you to calculate the company's income from a business for tax purposes. ITA: 18 78(4) ITA: 12(1) 18(100), 18 Problem 9 Source Renovations Ltd. specializes in home renovations and interior design in the Montreal area. Most of the construction and finish carpentry work is subcontracted to self-employed contractors. The following information relates to the corporation's net income for the year ended July 31. 14,875 Ch 1/Study Guide Assignment Pro Sales revenue Direct contracting General and administrative Salary to poc h Meals and entertainment (Note) Advertising expenses Note ) Travelling expense (Note) Interest and bank charges (Noted) Amortisation (Note ) Ofice expenses TRO 000 0.000 Total expenses... . R 500 $ 121.400 Net operating profil Other Gain on sale of real estate (Note Sale of design contracts (Note .... 19.000 Net income ......... .....$ 196,400 able of $14.500 for a renovation project Ginny informed you that there was one unrecorded c completed on July 30 Notes: (a) Meals and entertainment includes: Club dues ............. Promotional meals and season hockey tickets .5 1,800 10,400 $12.200 Total ... (b) Advertising expenses include: $2,200 Charitable donations..... Community promotion ...... Local advertising and mail outs. 650 2,050 $4.900 Total ........ (c) Travelling expense includes both air travel and travel reimbursement to employees for business travel. The company's policy is to reimburse employees 58 cents per kilometre for the business use of their automobiles. The employees drove less than 5,000 kilometres. 106 500 $ 9,400 prior your corporate tax 8100 $18,000 laten e Th Total method of amortization. The maximum capital cost allow y purchased two homes. After Ginny redecorated, the corporation ronit. The corporation has sold six homes in the last two years using the The uses the straight-line method of amortization. The movie ance that may be claimed is $8,000 (During the year, the company purchased two home sold the homes for a profit. The corporation has same strategy involvement in e of design contracts resulted from Ginny's desire to downscale her involvement in wrial design. The gain on sale is net of all costs and expenses and is considered to be a capital gain. The salary to Ginny's spouse is considered reasonable because he spends most of his working day administering her business, The controller of Source Renovation Ltd. has asked you to calculate the company's income from a business for tax purposes. ITA: 18 78(4)
