Today is April 12, 2024, and you, CPA, are a senior accountant with Kenney & Niu LLP. You just got out of a meeting with a new client, Alan Morneau, who has approached your firm for some tax advice. After finishing your meeting, you enter the office of the firm's tax partner, Emily Kenney, to discuss next steps. "Alan is an electrical contractor and has been operating as a sole proprietor for the past three years ever since he completed his apprenticeship," you explain. "He has tracked his revenue and expenses closely and has provided a draft income statement for the year ended December 31, 2023 (Appendix I). "Alan continues to grow his business and now has seven employees working for him, including his spouse. He keeps getting more work for his team, and profits have been steadily rising each year. Alan keeps hearing about how small business tax rates have been decreasing the past few years, and he is wondering if it makes sense to incorporate his business at this point." The conversation pauses as Emily reads over your meeting notes (Appendix II) and she provides the following direction: "Based on these notes it doesn't sound like Alan is recognizing revenue properly, and I'm concerned that his treatment of employee bonuses may also be incorrect. As a first step I'd like a report that analyzes the proper accounting treatment for these items under accounting standards for private enterprises (ASPE). "Next, you should address Alan's concerns about whether he should incorporate or not. Be sure to outline the advantages and disadvantages of this so that he can make an informed decision on his own. I also think it would be beneficial to separately explain to him, at a high level, how he can transfer his business assets in a tax deferred manner should he decide to incorporate. Be sure to highlight any compliance requirements to achieve this outcome. "As for Alan's request regarding the treatment of various items for his tax return (Appendix III), I will provide any explanation required for the tax treatment on the construction holdbacks when I review your report, so you do not need to consider this. I would like you to explain to Alan the correct tax treatment of all the other items." Emily's phone begins to ring, which abruptly ends your meeting. She answers the call and politely dismisses you with a nod. You return to your desk to begin the report.