Variety Manufacturing Ltd., a Canadian controlled private corporation, has just ended its first fiscal year, 2021. During that year, several outlays were made for which the Company is uncertain as to the appropriate tax treatment. You have been asked to advise them in this matter and, to that end, you have been provided with the list of outlays and expenditures that follows:

1 A part of the Company's raw materials had to be imported from Brazil. To obtain local financing for these inventories, the Company paid a $ 1,200 fee to a Brazilian financial consultant for assistance in locating the required financing.

2 Donations totaling $ 12,000 were given to various registered Canadian charities.

3 The Company paid $ 2,500 to the owner of a tract of land in return for an option to purchase the land for $ 950,000 for a period of 2 years. The land is adjacent to the Company's main factory and management believes it may be required for future expansion of the Company's manufacturing facilities.

4 Direct costs of $ 7,500, related to incorporating the Company, were incurred during 2021.

5 An amount of $ 10,000 was paid for a franchise giving the Company the right to manufacture a Brazilian consumer product for a period of ten years.

6. Because of its rapid growth, the Company was forced to move into a building that they had originally leased to another company. To cancel the lease, it paid $ 8,000 to the tenant. In addition, $ 9,500 was spent to landscape the facilities and another $ 13,000 was spent to provide a parking lot for employees.

Required Indicate which of the preceding expenditures you feel that Variety Manufacturing Ltd. will be able to deduct in 2021 in the calculation of net business income, and the tax treatment of the non-deductible expenditures. Explain your conclusions.

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