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Adjustments
1. Sales Deposit
s.20(1)(m.i) allows a reserve if it is reasonably anticipated
to be delivered after the year end
Pre-tax Income 28,200
Adjustment (28,200) (28,200)
NIFTP 0
3. Inventory Reserve
s.18(1)(e) does not allow reserves to be deducted until it is incurred
Pre-tax Income (23,000)
Adjustment 23,000 23,000
NIFTP 0
4. Warranty Program
s.18(1)(e) does not allow reserves to be deducted until it is incurred
Pre-tax Income 12,000
Adjustment (17,000) (17,000)
NIFTP (5,000)
5. Charitable Donations
Does not pass 3 rules test
Pre-tax Income (12,000)
Adjustment 12,000 12,000
NIFTP 0
7. Management Bonus
s.78(4) bonuses paid after 180 days past year end are deductible in
year paid (the $27,000 from last year is realized this year)
Pre-tax Income 0
Adjustment (27,000) (27,000)
NIFTP (27,000)
8. Holiday Banquet
Tax = GAAP No adjustments
9. Contingent Liability
s.18(1)(e) contingent liability is deductible in year costs are incurred
Pre-tax Income 17,000
Adjustment (35,000) (35,000)
NIFTP (18,000)
10. Mortgage
s.20(1)(e) expenses relating to borrowing money must be
expensed over 5 years
Pre-tax Income (7,000)
Adjustment 5,600 5,600
NIFTP (1,400)
13. Penalties
s.18(1)(t) cannot deduct interest on ITA penalties
No adjustment is necessary since the interest is part of the tax provision
16. Depreciation
Pre-tax Income (66,000)
Adjustment 66,000 66,000
NIFTP 0
CCA
Class 3 8 10 10.1 (BMW) 13 43 10.1 (Ford)
Beg UCC 220,000 60,000 80,000 12,495 150,000 90,000 0
Additions 750,000 20,000 0 0 0 30,000
Dispositions 195,000 5,000 56,000 10,621 0 0 0
UCC 775,000 75,000 24,000 1,874 150,000 90,000 30,000
50% Rule 277,500 7,500 0 0 0 0 15,000
Reduced UCC 497,500 67,500 24,000 1,874 150,000 90,000 15,000
CCA Rate 5% 20% 30% 30% - 30% 30%
Recapture
Terminal Loss 24,000
CCA 24,875 13,500 0 1,874 29,200 27,000 4,500
End UCC 750,125 61,500 0 0 120,800 63,000 25,500
Leasehold Improvements
Year 2013 Lesser of: 225000/5 = 45,000
225000/(6+3) = 25,000