Complete the template on the second tab (called "answer") and the third tab (called "CCA") to calculate
net income for tax purposes for Wally's World Inc. ("WW") based on the information provided below.
Wally's World Inc. ("WW") is a Canadian Controlled Private Corporation (CCPC) located in Edmonton,
Alberta that has been in operation since 2005. WW is a retail company that principally sells household
products. Mr. Wallace Stonson owns 100% of the common shares of the corporation.
Exhibit 1: Income Statement
Wally's World Inc.
Income Statement
December 31, 2023
Sales				$ 1,549,559
Cost of Sales:
Opening Inventory				$ 387,390
Purchases				$ 193,695
Closing Inventory				$ (38,739)
Cost of Goods Sold				$ 542,346
Gross Profit				$ 1,007,213
Expenses
Salaries and Wages (Note 7)				$ 123,965
Meals and Entertainment				$ 37,565
Insurance (Note 1)				$ 41,322
Advertising and Promotion (Note 2)			$ 44,273
Donations (Note 3)				$ 27,548
Memberships (Note 4)				$ 9,183
Bank charges and interest (Note 5)			$ 4,591
Renovation expense (Note 8)				$ 18,365
Amortization (Note 6)				$ 185,947
				$ 492,758
Income before Other Income				$ 514,455
Other Income:
Gain on sale (Note 8)				$ 182,586
Dividend income (received from Taxable Canadian corporations)		$ 20,287
Interest income (Canadian source)			$ 50,718
				$ 253,591
Income before Income Tax				$ 768,046
Provision for income tax (Note 9)				$ 291,858
Net income for the year				$ 476,189
Exhibit 2: Notes & Financial Information
1. Insurance includes business insurance premiums of	$ 33,057	and the remainder of the
expense consists of life insurance premiums. The life insurance is not required as collateral for the
bank loan.
2. Advertising and Promotion includes:				.
	Season tickets for Oilers Hockey Club	$ 22,137
	(used to entertain clients on a regular basis)
	Advertising inThe Globe and Mail
	(this paper is only distributed in Canada)	$ 22,137
				$ 44,273
3. Donations were made to the following recipients on July 1, 2023:
	SPCA Edmonton (registered charity)	$ 19,283
	Federal Liberal Political Party		$ 8,264
				$ 27,548
4. Membership dues are paid to the Petroleum Golf and Country Club. Mr. Stonson, owner and
director of the corporation, regularly takes customers to this golf club.
5. Included in the interest and bank charges account is	$ 1,530	of interest and penalties paid
on the late payment of the company's 2022 corporate income taxes owing.
6. Amortization is calculated on a straight-line basis for accounting purposes. On September 15, 2023,
new office furniture was purchased for	$ 30,991	and on the same day, old office furniture
was sold for proceeds of	$ 10,330	. This furniture was originally purchased for	$ 41,322
As the net book value of the furniture was equal to the sale proceeds, there was no gain or loss recorded
for this sale for accounting purposes. Apply the Accelerated Investment Incentive rules for all CCA
calculations.
Information from the 2022 (prior year) T2 return:
	UCC Class 1 closing balance		$ 1,239,647
	(Note: this class consists of one commerical office building)
	UCC Class 8 closing balance		$ 247,929
	UCC Class 14.1 closing balance	$ 11,806
	(Note: no additions or dispositions from Class 14.1)
7. Salaries and Wages includes the following:
Bonus earned by the President			$ 12,396
(this bonus was paid on September 15, 2024)
Contributions to registered pension plan for all employees		$ 24,793
Reasonable salaries to arm's length employees		$ 81,817
Travel costs for Vice President to attend sales convention in Toronto	$ 4,959
				$ 123,965
8. The gain relates to the sale of the building (and land), which was sold on July 1, 2023. The building was
the last asset in its class. The details of the sale are as follows:
	Sale proceeds (FMV of land and building)	$ 2,154,365
	Original cost of the building		$ 1,363,612
	Fair market value of the land		$ 1,051,079
	Adjusted cost base for the land		$ 945,971
The corporation sold the building where the retail store and office were located because the business
moved into a leased space. During the current year, a 6-year lease was signed for the new retail and office
space. Renovations were made to the leased space prior to moving into the new premises (see Income
Statement above for renovation cost).The leasehold improvements qualify for depreciation (CCA).
9. The provision for income tax is an estimate of the taxes to be paid for the current year.
Other Information: The corporation has a net capital loss carryover available of	$ (155,218)