Julstan Multi-Enterprise Limited (JML) is a Canadian-controlled private corporation. It has operated with a December 31 year-end.
Question:
Julstan Multi-Enterprise Limited (JML) is a Canadian-controlled private corporation. It has operated with a December 31 year-end. At its December 31, 2013 tax year-end, the balance in its capital dividend account was nil, with no negative amounts carried for future offset.
The following transactions occurred in the indicated taxation years thereafter:
May 24, 2014: sale of shares held in a public corporation for proceeds of $48,000; the shares had cost $72,000 and JML paid a sales commission of $2,000
June 30, 2015: acquisition of an unlimited-life franchise for $49,000
August 20, 2016: received $25,000 as a dividend from the capital dividend account of a wholly owned subsidiary
October 31, 2017: sold the following assets pertaining to the franchise
Proceeds of Disposition | Original Cost | UCC | Selling Costs | |
Investments | $ 36,000 | $47,000 | n/a | $1,000 |
Land | 40,000 | 26,000 | n/a | 2,000 |
Building | 118,000 | 92,000 | 87,000 | 6,000 |
Equipment | 12,000 | 17,000 | 10,500 | Nil |
Franchise rights | 55,000 | 49,000 | 31,500 | Nil |
Goodwill | 30,000 | Nil | Nil | Nil |
June 9, 2018: received $100,000 from a life insurance policy on the life of a key employee; the corporation had paid total premiums of $19,000 on the policy
July 22, 2019:elected to pay a dividend of $75,000 out of the capital dividend account
Required:
Compute the balance in JML’s capital dividend account at December 31, 2019 (Show all calculations)
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac