Joan's Party Planners Limited provides start-to-finish party planning services for all occasions. A summarized set of financial statements for the taxation year ended December 31, 2020 are set out below:

Joan's Party Planners Limited

STATEMENT OF INCOME

For the year ended December 31, 2020

Revenues.......................................................................................................		$561,000
Expenses: General and administrative.........................	$411,930
Amortization on fixed assets..........................................	28,170	440,100
		120,900
Gain on disposal of fixed assets (see details below).............................		79,100
Net income before income taxes...............................................................		200,000
Provision for income taxes........................................................................		43,240
Net income after income taxes..................................................................		$156,760

Additional information related to 2020 is provided below.

The opening UCC balances as at January 1, 2020 were as follows:

Class 1.........................................................................	$30,000
Class 6.........................................................................	2,100
Class 8.........................................................................	2,000
Class 10.......................................................................	11,000
Class 12.......................................................................	Nil

During 2020, Joan's Party Planners Limited purchased the following depreciable assets:

Office furniture.....................................................................................................	$15,000
Delivery van..........................................................................................................	30,000
Computer equipment & related systems software (October 2020).............	10,000
Computer word processing software................................................................	6,000
Cutlery and dishes................................................................................................	21,000
Kitchen utensils (less than $200 each).............................................................	1,000
Photocopy machine.............................................................................................	2,600

In April 2020, Joan's Party Planners Limited sold their owned business premises (consisting of land and a Class 1 building) and moved to a more suitable location, which is currently being rented. They received proceeds of $20,000 for the land (original cost of $5,000). The Class 6 asset mentioned above is the fence that was erected around these former business premises. On the sale of these premises, no proceeds were allocated to the fence. This was the only asset in Class 6.

The details of the sale of the former Class 1 building, as well as the other depreciable assets sold during 2020, are set out below:

	Proceeds	Original Cost	Net book value
Cl 1 building	125,000	45,000	40,000
Chairs and tables (Class 8)	6,000	8,000	5,120
Delivery van	4,500	18,000	6,175
Office equipment	5,000	15,000	4,915
Table linens	3,000	25,000	8,190

During 2020, Joan's Party Planner Limited purchased the client list from a competitor who was going out of business. They paid $12,000 for this list which had an indefinite life.

Required:

Using the templates provided, calculate the corporation's minimum income from business for the year ended December 31, 2020. Assume all expenses are reasonable in the circumstances.

Ensure you complete the template for CCA as well. You are required to calculate the CCA amount, plus the closing UCC.

Support your treatment of each item listed above with an appropriate reference

Answer rating: 100% (QA)

1 Minimum Income from Business Calculate the minimum income from business Revenues 561000 Expenses General and administrative 411930 Amortization on fixed assets ... View the full answer