In Year 1, Takeover Corp. purchased another business. The purchase price included $100,000 for goodwill. In Year

Question:

In Year 1, Takeover Corp. purchased another business. The purchase price included $100,000 for goodwill. In Year 3, the acquired business was sold. The sale price included $140,000 for the goodwill.
Calculate the amount to be included in Takeover Corp.’s business income in Year 3.
Assume the CEC balance at the beginning of Year 1 is $0. Income tax reference: ITA: 14(1), (5), 20(1)(b).