Fenton Corp. (Fenton), a Canadian-controlled private corporation, provided the following condensed income statement for its year...

  

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Fenton Corp. (Fenton), a Canadian-controlled private corporation, provided the following condensed income statement for its year ended December 31, 2020: $1,750,000 1.155.000 $ 595.000 Revenues Expenses Accounting income Other information: 1. Revenues include an accounting gain of $140,000 on the disposal of a building, which was on leased land. Proceeds of disposal for the building were $515,000, and the original cost was $425.000. The building is the only asset in Class 1. 2. In 2018, Fenton sold shares that resuited in a net capital loss of $12,500. This amount carried forward to 2020. 3. Expenses for the 2020 year included the following: • Donations: $7,500 • Meals and entertainment: $17,000 • Landscaping: $45,000 • Golf club membership for salesperson: $8.000 • Employer contributions to Registered Pension Plan of employees: $20,000 4. During 2020, Fenton received dividends from Canadian taxable corporations of $125,000, which is included in net income. All other income earned by Fenton is active business income. 5. A passenger vehicle with a cost of S36,000 was purchased during 2020. 6. Amortization expense in 2020 was $13,500. 7. Fenton will claim the maximum allowable capital cost allowance (CCA) in 2020. The CCA classes and related 2020 opening undepreciated capital cost (UCC) balances were as follows: Class Beginning UCC $385,000 $ 5.500 $ 61,000 1 8 10 Required: a) Calculate Fenton's net income for tax purposes for 2020. (7.5 marks) b) Calculate Fenton's minimum taxable income for 2020. (1.5 marks) Fenton Corp. (Fenton), a Canadian-controlled private corporation, provided the following condensed income statement for its year ended December 31, 2020: $1,750,000 1.155.000 $ 595.000 Revenues Expenses Accounting income Other information: 1. Revenues include an accounting gain of $140,000 on the disposal of a building, which was on leased land. Proceeds of disposal for the building were $515,000, and the original cost was $425.000. The building is the only asset in Class 1. 2. In 2018, Fenton sold shares that resuited in a net capital loss of $12,500. This amount carried forward to 2020. 3. Expenses for the 2020 year included the following: • Donations: $7,500 • Meals and entertainment: $17,000 • Landscaping: $45,000 • Golf club membership for salesperson: $8.000 • Employer contributions to Registered Pension Plan of employees: $20,000 4. During 2020, Fenton received dividends from Canadian taxable corporations of $125,000, which is included in net income. All other income earned by Fenton is active business income. 5. A passenger vehicle with a cost of S36,000 was purchased during 2020. 6. Amortization expense in 2020 was $13,500. 7. Fenton will claim the maximum allowable capital cost allowance (CCA) in 2020. The CCA classes and related 2020 opening undepreciated capital cost (UCC) balances were as follows: Class Beginning UCC $385,000 $ 5.500 $ 61,000 1 8 10 Required: a) Calculate Fenton's net income for tax purposes for 2020. (7.5 marks) b) Calculate Fenton's minimum taxable income for 2020. (1.5 marks)

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a Net income for tax purposes accounting income c... View the full answer