Pepperson Inc. has a fiscal year ending December $31.$ For the year ending December $31,2023,$ the 

 

Companys accounting Net Income, determined in accordance with generally accepted accounting

principles, was $$596,000.$ Other information related to the preparation of its $2023$ tax return is as

follows:

$1.$ The Company spent $$75,000$ on landscaping for its main office building. This amount was

recorded as an asset in the accounting records and because the work has an unlimited life,

no amortization was recorded on this asset.

$2.$ The Company spent $$12,500$ on advertisements in Fortune Magazine, a U$.$S$.$ based

publication. Approximately $90$ percent of its non$-$advertising content is original editorial

content. The advertisements were designed to promote sales in Canadian cities located on

the U$.$S$.$ border.

$3.$ The amortization expense was $$623,000.$

a$.$ At the beginning of $2023,$ the Company has a balance in Class $1$ of $$1,000,000,$

representing the UCC of its headquarters buildings. The Company has owned this

building since $2001.$ In general, other buildings are leased. However, in February,

$2023,$ a policy change results in the acquisition of a new store building at a cost of

$$650,000,$ of which $$125,000$ is allocated to land. This building is used $100$ percent

for non$-$residential purposes and is allocated to a separate Class $1.$ None of the

usage is for manufacturing and processing.

b$.$ The January $1,2023$ UCC balance in Class $8$ was $$4,200,000.$ During $2023,$ there

were additions to this class in the total amount of $$700,000.$

c$.$ In addition, Class $8$ assets with a cost of $$400,000$ were sold for proceeds of

$$350,000.$ The net book value of these assets in the accounting records was

$$325,000,$ and the resulting gain of $$25,000$ was included in the accounting income

for the year. The UCC at the beginning of the year was $412,000$ and there are

numerous assets remaining in the class at the end of the $2023$ taxation year.

d$.$ At the beginning of $2023,$ the UCC in Class $10$ was $$800,000,$ reflecting the

Companys fleet of cars. As the Company is changing to a policy of leasing its cars,

all of these cars were sold during the year for $$687,000.$ There was no gain or loss

included in the financial statements since the proceeds of $$687,000$ was the same

as the book value.

$4.$ Included in travel costs deducted in $2023$ for accounting purposes was $$12,000$ for airline

tickets and $$41,400$ for business meals and entertainment.

$5.$ The Company paid, and deducted, for accounting purposes, a $$2,500$ initiation fee for a

corporate membership in the Highland Golf And Country Club.

$6.$ The Company paid, and deducted, property taxes of $$15,000$ on vacant land that was being

held for possible future expansion of its headquarters site.

Required: Calculate Pepperson Inc.s minimum Net Income For Tax Purposes for the $2023$ taxation

year. In addition, calculate the January $1,2024$ UCC balances for each CCA class. Show all of you

work.

Answer rating: 100% (QA)

Answer To calculate Pepperson Incs minimum Net Income for Tax Purposes for the 2023 taxation year and the January 1 2024 UCC balances for each CCA cla... View the full answer