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PROBLEM THREE [ITA: 9(1);13(1),-18(1)(a),(b);20(1)(a),(b);40(1);78(4);Reg.11oo(1), (2). (3); 1101(5P)] KC Restaurants Ltd. was incorporated on July 1, 2019, and began operations immediately. By December 31, 2019 (the corporation's first year end), three new restaurants had been opened, two of which were franchises. During the first few months of operations, the following expenditures were made by KCR: Legal fees for the cost of $ 4,000 incorporation Cooking equipment including 320,000 food processors Franchise #1 40.000 Franchise #2 80.000 Cutlery, plates, glasses, and cups 115,000 Computer software for restaurant 3.000 accounting Building (constructed after March 220,000 18, 2007) Franchise #1 was purchased on October 1, 2019, and will expire after 120 months. Franchise #2, which was acquired on July 1, 2019, has no expiry date and will continue indefinitely, provided that the terms of the franchise agreement are met. Other equipment, such as tables and chairs, was leased. For the taxation year ending December 31, 2019, KCR claimed a deduction for the maximum available CCA. Proceeds O_rigina| cost Goodwill $ 60.000 0 Land 15,000 12,000 Building 230,000 220,000 Cooking equipment 40,000 72,000 Cutlery, plates, glasses 26,000 37,000 On December 1, 2020, KCR sold the nonfranchised restaurant. The sale price included these proceeds: The Income Statement prepared for accounting purposes for the year ended December 31, 2020, with additional information, is provided below: Sales $1,845,000 Cost of sales Lm Gross profit 834,000 Rent, property taxes, and $ 72,000 insurance Salaries and wages 275,000 General overhead 301,000 Advertising and other m MM 90,000 Gain on sale of goodwill 60,000 Net losses on sale of fixed {QML assets Net income wm 1. Included in advertising expenses is $2,000 of donations made to a registered charity. 2. Salaries include an accrued bonus of $12,000 awarded on December 31, 2020, to a manager. The bonus will be paid in three equal instalments of $4,000 on April 30, 2021, August 31, 2021, and December 31, 2021. 3. Expenses include accounting amortization/depreciation of $102,000 Required: 0. Calculate the undepreciated capital cost for tax purposes for each class of depreciable property at the end of the 2019 and 2020 taxation years after maximum CCA claims are made. b. Note any Terminal Losses or Recapture on the sale of the restaurant assets in 2020. c. For the taxation year ended December 31, 2020, calculate KCR's net income for tax purposes. Start with Net Income per Financial Statements, and add or subtract adjustments to arrive at Net Income for tax purposes