Question 1 (15 points) NET BUSINESS INCOME Morgon Inc. is a proprietorship owned by Helen Morgon. Its taxation year ends on December 31. For the current taxation year, Ms. Morgon's daughter, Summer, who keeps the books for the business, has calculated a Net Income for Morgon Inc. of $193,200. In calculating this figure, Summer used generally accepted accounting principles. Other Information: 1. During the year, Morgon Inc. spent $12,700 for landscaping the grounds around its office. In accordance with generally accepted accounting principles, this amount was treated as a capital expenditure. As the work was done late in the year, no amortization was deducted for the current year. 2. The following items were included in the accounting expenses: $69,300 15,000 7,200 Amortization expense Golf club membership fees for Helen and Summer Cost of sponsoring local soccer teams Advertising on a foreign television station (Directed at Canadian market) Business meals and entertainment Charitable donations Loss from theft Interest paid on building mortgage Interest paid on late income tax instalments Appraisal costs on land to be sold Damages resulting from breach of contract 9,600 22.000 31.900 16, 200 24,200 1.400 4200 3.800 Question 1 (15 points) NET BUSINESS INCOME Morgon Inc. is a proprietorship owned by Helen Morgon. Its taxation year ends on December 31. For the current taxation year, Ms. Morgon's daughter, Summer, who keeps the books for the business, has calculated a Net Income for Morgon Inc. of $193,200. In calculating this figure, Summer used generally accepted accounting principles. Other Information: 1. During the year, Morgon Inc. spent $12,700 for landscaping the grounds around its office. In accordance with generally accepted accounting principles, this amount was treated as a capital expenditure. As the work was done late in the year, no amortization was deducted for the current year. 2. The following items were included in the accounting expenses: $69,300 15,000 7,200 Amortization expense Golf club membership fees for Helen and Summer Cost of sponsoring local soccer teams Advertising on a foreign television station (Directed at Canadian market) Business meals and entertainment Charitable donations Loss from theft Interest paid on building mortgage Interest paid on late income tax instalments Appraisal costs on land to be sold Damages resulting from breach of contract 9,600 22.000 31.900 16, 200 24,200 1.400 4200 3.800