Several years ago George Danton, after being laid off, decided he could benefit from his love of

flowers and fascination for viewing dead bodies by opening a flower shop. This allowed him to

make frequent visits to the various funeral homes in the area. The shop uses a December $31$

taxation year. The business has been a great success, both in terms of being profitable and in

enhancing George's enjoyment of life.

As George is the sole proprietor of the business, he has had no need to report income figures

to anyone. Given this, he has always used tax procedures to calculate the annual income of the

business. For the year ending December $31,2023,$ using his usual tax procedures, George has

calculated his net business income to be $$613,300.$

Because a very large funeral home has opened in a suburb, George has decided to expand into

that area. To do this, he needs a mortgage on the property that will be acquired for operations

in the new location. To his dismay, he finds that the lender is insisting on financial statements

prepared in accordance with Accounting Standards for Private Enterprises $($ASPE$).$

As he has no knowledge of ASPE, he has asked you to determine the amount of ASPE based

income that Danton$$s Flowers has earned for the $2023$ fiscal period.

Other Information:

$1.$ In the net business income calculation based on tax procedures $($ITA $67\mathrm{.}1),$ George deducted $$8,450$

in business meals and entertainment costs.

$2.$ Because his shop is near the U$.$S$.$ border, George spent $$7,420$ advertising on a U$.$S$.$ television

station. The commercials were directed at Canadian resident viewers.

$3.$ Because of a broken window during early December, live flowers costing $$6,320$ were destroyed.

$4.$ During $2023,$ George paid a high level Canada Customs official a total of $$19,460$ in cash.

In return, he received priority clearance for all his imports, as well as clearance for live plant

imports that should have been restricted. Since this is an illegal payment to a government

official, a$.$k$.$a$.,$ a bribe, it is not deductible for tax purposes.

$5.$ During $2023,$ the business made $$6,300$ in contributions to the Hospice Association. This

association is a registered charity.

$6.$ For tax purposes, the ending inventories of the business were carried at the market value of

$$86,300.$ Their total cost, determined on a FIFO basis, was $$73,150.$

$7.$ George deducted $$51,400,$ the maximum amount of CCA that was available for the year. You

have determined that amortization under ASPE would have been $$46,350.$

$8.$ George spent $$6,070$ on uniforms for the local men's softball team

$9.$ George owns a delivery vehicle that cost $$29,000.$ It is the only Class $10$ property of the business and, as of January $1,2023,$ the class had a UCC balance of $$8,455.$ During the year, the vehicle is sold for $$4,300$ and replaced with a leased vehicle. Under ASPE, its carrying value at the time of the sale would have been $$14,500.$ The leasing expenses are fully deductible for tax purposes.

$10.$ In December $2023,$ George spent $$15,200$ on landscaping the grounds around his store.

Given the late date at which this work was done, no amortization would be required for

accounting purposes with respect to these costs for $2023.$ It is expected that these landscaping improvements will last at least $10$ years.

$11.$ During $2023,$ George sold Class $8$ assets for $$21,300.$ These assets had a capital cost of

$$32,600$ and were not the last assets in Class $8.$ There was a positive balance in Class $8$ at

the end of the year. The accounting carrying value of the property that was sold was $$18,300.$

$12.$ No income tax was deducted in calculating net income.

Required: Determine the $2023$ ASPE$-$based accounting income for Danton$$s Flowers. Do not

include in your calculations any income tax that George will have to pay on this income. If you

do not make an adjustment for any of the items included in other information, indicate why this

is the case.

General Comment This reverse reconciliation exercise requires using the opposite approach

applied in a typical reconciliation from accounting income to net income. For example, amortiza$-$tion would be added and CCA deducted in a standard reconciliation. In this reverse approach,

however, amortization would be deducted and CCA added.