please provide me a solution for attached two questions for my review.

Question 1 The following information is taken from the financial statements and audit working papers of Eldridge Asset Sales Inc. (\"EASI\") for its fiscal year ended December 31, 2015. Eldridge Asset Sales Inc. Condensed Unaudited Income Statement For the Year Ended December 31, 2015 Sales $16,650,000 Cost of goods sold (14,050,000) Gross profit $ 2,600,000 Selling expenses $975,000 General and administrative expenses 195,000 Net income before provision for income taxes Provision for income taxes current future Net income after tax (1,170,000) $ 1,430,000 $220,000 310,000 (530,000) $ 900,000 Included in sales for the year is a deposit of $8,200 received from a customer for goods that will be delivered next year. The following items were deducted in arriving at the above net income: 1. During the year, a warehouse worker managed to remove valuable inventory worth $8,000 during the night shift by taking it out in his lunch box. 2. Late in the year, it became apparent that during the next year new competitive products would come on the market which would drive the price of EASI's products down. They expect this decline to take place in about six months. As a result, they decided to set up a reserve for a decline in the inventory value in the amount of $17,000. They have never set up this kind of reserve before. 3. Because EASI's products come back for repair under their warranty program, they set up a reserve for this expense on their financial statements. Last year the reserve was $76,000. This year they increased the reserve to $85,000. 4. Charitable donations were made in the amount of $8,000. 5. Golf club membership fees in the amount of $1,600 were paid for the sales manager who used the club regularly to close sales. 6. The sales manager incurred expenses related to meals and entertainment at the golf club in the amount of $2,300. 7. Management bonuses of $92,000 were accrued at December 31, 2015 ($27,000 was not paid until June 30, 2016 due to lack of sufficient funds). 8. The December holiday banquet for the employees cost $10,000. 9. EASI had a dispute with one of its major suppliers over the use of the supplier's product. As a result of a court decision, the supplier was awarded damages for breach of contract in the amount of $38,000. 10. In order to raise money for expansion, the company mortgaged the real estate it used in the business. It incurred accounting fees of $5,000 and appraisal fees of $2,000 related to this financing. The mortgage has a 10-year term and a 30-year amortization period. 11. A number of years ago, the company issued a bond at a discount. They have been amortizing this discount at the rate of $7,000 per year ever since, including this year. 12. During the year, the company bought the shares of another company. In completing this transaction, legal fees of $7,500 were incurred. 13. During the year, they borrowed to buy new equipment. The interest expense related to this was $21,000. (deductible becasue interest is paid to earn business income) 14. Instead of borrowing money at the bank, the company decided to pay their income tax instalments late. This resulted in an interest charge from the Canada Revenue Agency in the amount of $90. Interest mandated by the Income Tax Act is not deductible under 18(1) (t) - add back 90 15. A life insurance policy was taken out on the president's life in order to provide funding for the company in the event of his death. Life insurance premiums on this policy amounted to $4,200. Life insurance is NOT used colleteral for financing so 20(1)(e.2) does not apply - need to add back 4,200 16. Business interruption insurance premiums of $3,100 were paid to protect the company in the event a fire forced them to close for a period of time. (Normal cost of doing business - deductible deductible) 17. Computer software costing $750 related to word processing was expensed because they always bought the upgrades each year. Software is capital in nature, not deductible under 18(1)(b) - need to add back - should be included in CCA (e.g. Sch 8) 750 18. Amortization expense on the fixed assets was $66,000. Not deductible under 18(1)(b) - take corresponding CCA and CEC amount 66,000 & 2,500 19. Amortization of goodwill which was bought in 2005 for $100,000 was $2,500. An examination of the capital cost allowance schedule for 2015 provided the following opening balances for the undepreciated capital cost for each class of EASI's assets: Class3 building....................................... $170,232 Class8 office furniture and equipment.... 60,000 Class1 0 trucks for transportation of goods 80,000 Class12 small tools................................... 5,000 Class1 3 leasehold improvements.............. 187,500 Class4 3 manufacturing equipment............ 90,000 Cumulative eligible capital account balance... 40,000 The following additional information was found in the 2015 fixed asset schedules working paper files. 1. The building which cost $697,426 in 1987 was sold for $195,000. It was the only building in Class 3 at the time of its sale. A new building was purchased (non used) in April 2015 for $750,000. Also, in February 2015 a lot adjacent to the new building, was purchased for $100,000 for use as a parking lot by employees and visitors. This lot was paved at a cost of $25,000. A fence was erected around an outside storage area near the new building at a cost of $40,000. 2. New office furniture was purchased for $20,000. This purchase replaced old assets which were sold for $5,000. None of the old assets was sold for more than capital cost. 3. Three small trucks purchased in 2010 for $12,000 each were traded in for three new trucks. Each new truck was priced at $15,000, but this was reduced by a trade-in credit of $2,500 for each old truck. 4. Some small tools were sold for a total of $7,000. All of these tools were sold at a price less than their capital cost. 5. Leasehold improvements had been made to a leased warehouse at a cost of $225,000 in 2013. The remaining length of the lease in that year was six years with two successive renewal options of three years each. Further leasehold improvements were made to this warehouse in 2015 at a cost of $21,000. 6. During 2015, an unlimited life franchise was sold for $48,000. Total cumulative eligible capital amounts deducted in the 2005 to 2014 taxation years, inclusive, was $35,000. 7. Accounting gains and losses on the above asset sales netted to nil. Required: Based on the foregoing information, compute the minimum income from business for tax purposes for Eldridge Asset Sales Inc. in respect of its 2015 fiscal year. REQUIRED 1. Calculate the corporation's minimum income for tax purposes from business or property for the year ended December 31, 2015, under the provisions of the Act. Assume all expenses are reasonable in the circumstances. 2. In addition, comment on the items not included in your calculation of income from business. Support your treatment of each item listed above with a reason (notes) and section reference. Calculations are recommended in columnar/row wise to calculate CCA, UCC Ending balance. State all tax consequences such as Taxable capital Gain, Recapture terminal loss if any. State your assumptions if any Question 2 Mr. Richmond, a new client, has invested in rental properties, principal residences and other capital property with inheritance monies and other liquid cash. He provides you with the following information with respect to his 2015 taxation year. Mr. Richmond is employed by Wealth Inc., a Canadian-controlled private corporation, and received the following income and benefits: (1) Salary (net) .............................................. Payroll deduction: Income taxes .................................. $15,100 CPP ......................................... 2,356 EI .......................................... $49,953 891 Registered pension plan (defined benefit: current service) 3,700 22,047 $72,000 (2) Mr. Richmond paid professional fees of $500 to the Professional Engineers of Ontario. (3) Mr. Richmond sold two lots of his stock options. He provides you with the following: 1st lot 450 shares sold on March 15, 2015, for $26.50 per share. These shares were purchased in February 2008 for $8 at which time the shares were valued at $10.50. 2nd lot 600 shares sold on December 5, 2015, for $25 per share. These shares were purchased on April 12, 2015, for $15 at which time the shares were valued at $21. The fair market value at the date of grant was $17 (4) Mr. Richmond received an interest-free loan of $9,000 on March 12, 2015, to enable him to purchase shares of Wealth Inc. The loan was outstanding until the shares were sold on December 5, at which time the loan was repaid. Assume that the prescribed rate throughout the year was 7%. In addition, during 2015, Mr. Richmond received the following income from various sources including certain capital dispositions. (A) Mr. Richmond sold the following assets: Cost Proceeds Antique foot stool ............................... . $1,100 $ 900 Painting ...................................... . 950 1,500 Stamp collection ................................. 250 850 (B) During 2015, Mr. Richmond sold his two residences, in order to purchase a larger home in an expensive suburb. The following facts relate to these two residences: Date purchased Cost Commission Proceeds City home ........ 2006 $95,000 $21,000 $350,000 Cottage .......... 2001 15,500 12,000 200,000 (C) In addition to his residences, Mr. Richmond owns two rental properties. The following information pertains to these two properties: Wealthier St. Richmount St. Cost of land ..................... $70,000 $100,000 Cost of building .................. $55,000 $ 80,000 UCC January 1, 2015, Class 1 ...... $39,000 $ 65,000 Rental revenue in 2015 ............. $ 7,600 $18,000 Expenses: Taxes (property) .............. $ 2,100 $ 1,800 Other expenses .............. . 4,300 6,100 Mortgage interest............. 3,600 Nil $10,000 $ 7,900 The Richmount St. rental property was sold in November for proceeds of $250,000 less $9,000 of selling costs. Of the proceeds, $140,000 was for the land. Mr. Richmond purchased the Wealthier St. rental property by placing a mortgage on his home. His monthly payments are $450 per month, of which $300 per month represents interest. (D) Mr. Richmond gifted his wife $10,000 in June 2015 to allow her to invest in the stock market. Mrs. Richmond decided to be a cautious investor for the first while; as a result, she invested the $10,000 in Treasury Bills which earned $600 from June to December 2015. (E) In addition, Mr. Richmond decided to provide his younger brother, who is 22, with a noninterest bearing loan of $5,000 to allow him to complete his Masters in Marine Biology. Mr. Richmond's brother paid his tuition fees with the funds. (F) Mr. Richmond gifted $8,500 to each of his twin children, Dolly and Camp, aged 15. Both children placed their monies in high interest-bearing savings accounts each receiving interest of $1,050 in 2015. (G) Mr. Richmond received dividends from the following investments: Foreign Co. a foreign corporation (net of $88 withholding tax) ........ $500 Wealth Inc. a Canadian-controlled private corporation (from income taxed at the low corporate rate) ................................. 800 (H) Mr. Richmond owns two mutual funds, Dumark Mutual Fund and Paget Mutual Fund. He received a T3 slip from Dumark Mutual Fund indicating the following income amounts allocated to his account and reinvested in 2014: Capital gains .............................................. $1,200 Actual amount of dividends ................................... 347 Taxable amount of dividends .................................. 500 Mr. Richmond had invested $20,000 in the Dumark Fund in 2014. This resulted in the purchase of 1,640.824 units of the fund. In 2014, income of $46.31 was allocated to his account and reinvested. The reinvestment resulted in the purchase of 3.845 units at the market value of $12.044 per unit. The 2015 income allocation resulted, on reinvestment of the $1,544.97, in the purchase of 119.358 units at the market value of $12.944 per unit. Late in 2015, after the income allocation, Mr. Richmond sold 1,000 units for a total of $12,881. (I) Mr. Richmond sold a $100,000 Government of Canada bond for $115,327. This bond paid interest semi-annually at an interest rate which was much higher than current interest rates. The proceeds received of $115,327 included accrued interest of $5,327. Mr. Richmond had purchased the bonds on the open market for $98,000. (J) In 2012, Mr. Richmond loaned $120,000 to his brother-in-law's company which was a small business corporation. The loan paid interest at commercial rates, but no interest was received in 2015 because the company went into receivership. As an unsecured creditor, Mr. Richmond received 10 cents on the dollar ($12,000) in 2015 in full payment of this loan. (K) Mr. Richmond has a listed personal property loss, carried forward from 2009, of $500. REQUIRED Determine Mr. Richmond's Division B income according to the ordering rules in section 3 for 2015. Assume that Mr. Richmond claimed $60,000 of his capital gains exemption in prior years. Ignore the effects of the leap year