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Assessment out of 21 Marks Using the information below, determine the Net Income for Tax Purposes for The Company LTD. Ensure your answer includes any supporting calculations and CCA Schedules. Excerpt from Financial Accounting Statements: Sales Less: COGS Gross Profit Less: Meal and Entertainment Expenses Utilities Expense (Gain) Loss on Disposal of Building Convention Expenses Charitable Donations Rent Expense (Building) Depreciation Expense Interest Expense Sataries Expense Club Dues Expense Advertising Expense Miscellaneous Expenses Net Income before Taxes Less: Provision for Income Taxes Net Income for Accounting Purposes 31-Dec 17 $1,000,000 359.000 $641,000 $12,000 15,000 5.000 3,000 7,200 60,000 15,000 3.500 222.000 4,000 20,000 2.000 $368.200 $272,300 54,460 $217,840 NOTES: #1)The above condensed financial statements were prepared in accordance with GAAP (unless stated otherwise). w2) All figures in question are expressed in Canadian Dollars 3) The Club Dues relate to annual membership fees at Dimpled Balls Golf Club. The Company LTD on a regular and continuous basis uses this facility to maintain relationships with existing clients as well as meet new customers N4) Advertising Expense Includes $5,000 CAD paid to a US Broadcaster to entice Canadian consumers to purchase our products. #5) Interest Expense related mostly to a line of credit used for business activities. However, $1,000 related to late payment fees to CRA. #6) Convention Expenses related to the company CEO attending a four day sales convention in Ottawa, Ontario related to our products and services. The convention expense didn't break out an amount for meals and the entire invoice was recorded as "Convention Expenses" in the accounting records. 7) Salaries expense includes $ 12,000 in bonuses declared on December 11, 2017 that were paid on August 2, 2013 #8) Assume The Company to wants to claim the maximum CCA Deduction they are end to 10) UCC Balances for January 1, 2017 are as follows: Class 1 (4%) $160,000 (Consisting of One Bulding Only) Class 8 (20%) 115,000 Class 14.1 8.000 Balance converted from old CEC Pools There was only one depreciable asset disposed of during the year (Building). The journal entry was as follows (Class 1): Cash 175,000 (Net Proceeds on Sale Loss on Disposal of Building 5.000 Accumulated Dep'n - Building 20,000 building 200.000 (Cost of Buliding During the year, the company acquired equipment for $25,000 The Company LTD signed a lease for a building on January 1, 2017. Since the original layout didn't work for our operations, we incurred expenses to remodel the building. The lease details are as follows: Cost of Renovations Lease Term: First Renewal Option: Second Renewal Option: $50,000 8 2 2 The Company LTD, on April 5, 2017. purchased a new luxury vehicle that the CEO will use to impress clients with. The purchase price of the vehicle was $95,000. For simplicity, ignore any excise taxes (GST and PST) for this transaction 111) The corporation sold inventory on installment in 2017. The sales price was $100.000 and the cost of goods sold was $40,000. The $100,000 accounts receivable will require payments of $50,000 on June, 2018 and $50,000 on June, 2019 Assessment out of 21 Marks Using the information below, determine the Net Income for Tax Purposes for The Company LTD. Ensure your answer includes any supporting calculations and CCA Schedules. Excerpt from Financial Accounting Statements: Sales Less: COGS Gross Profit Less: Meal and Entertainment Expenses Utilities Expense (Gain) Loss on Disposal of Building Convention Expenses Charitable Donations Rent Expense (Building) Depreciation Expense Interest Expense Sataries Expense Club Dues Expense Advertising Expense Miscellaneous Expenses Net Income before Taxes Less: Provision for Income Taxes Net Income for Accounting Purposes 31-Dec 17 $1,000,000 359.000 $641,000 $12,000 15,000 5.000 3,000 7,200 60,000 15,000 3.500 222.000 4,000 20,000 2.000 $368.200 $272,300 54,460 $217,840 NOTES: #1)The above condensed financial statements were prepared in accordance with GAAP (unless stated otherwise). w2) All figures in question are expressed in Canadian Dollars 3) The Club Dues relate to annual membership fees at Dimpled Balls Golf Club. The Company LTD on a regular and continuous basis uses this facility to maintain relationships with existing clients as well as meet new customers N4) Advertising Expense Includes $5,000 CAD paid to a US Broadcaster to entice Canadian consumers to purchase our products. #5) Interest Expense related mostly to a line of credit used for business activities. However, $1,000 related to late payment fees to CRA. #6) Convention Expenses related to the company CEO attending a four day sales convention in Ottawa, Ontario related to our products and services. The convention expense didn't break out an amount for meals and the entire invoice was recorded as "Convention Expenses" in the accounting records. 7) Salaries expense includes $ 12,000 in bonuses declared on December 11, 2017 that were paid on August 2, 2013 #8) Assume The Company to wants to claim the maximum CCA Deduction they are end to 10) UCC Balances for January 1, 2017 are as follows: Class 1 (4%) $160,000 (Consisting of One Bulding Only) Class 8 (20%) 115,000 Class 14.1 8.000 Balance converted from old CEC Pools There was only one depreciable asset disposed of during the year (Building). The journal entry was as follows (Class 1): Cash 175,000 (Net Proceeds on Sale Loss on Disposal of Building 5.000 Accumulated Dep'n - Building 20,000 building 200.000 (Cost of Buliding During the year, the company acquired equipment for $25,000 The Company LTD signed a lease for a building on January 1, 2017. Since the original layout didn't work for our operations, we incurred expenses to remodel the building. The lease details are as follows: Cost of Renovations Lease Term: First Renewal Option: Second Renewal Option: $50,000 8 2 2 The Company LTD, on April 5, 2017. purchased a new luxury vehicle that the CEO will use to impress clients with. The purchase price of the vehicle was $95,000. For simplicity, ignore any excise taxes (GST and PST) for this transaction 111) The corporation sold inventory on installment in 2017. The sales price was $100.000 and the cost of goods sold was $40,000. The $100,000 accounts receivable will require payments of $50,000 on June, 2018 and $50,000 on June, 2019
