KM Ltd. is a Canadian-controlled private corporation, operating a small gift store in Vancouver. The company has
Question:
KM Ltd. is a Canadian-controlled private corporation, operating a small gift store in Vancouver. The company has a December 31st year-end. KM's financial statements reported net income before taxes of $210,000 in 20x0. Financial information relating to 20x0 is as follows:
Land adjacent to the gift shop was purchased with a $75,000 bank loan during the year to allow for an outdoor sales area during warm weather. Interest expense on the loan for the year was $9,600, and the appraisal fee to finance the loan was $1,000. Both the interest and the appraisal fee were expensed by KM in 20x0.
The company hired a contractor to landscape the land. The $5,000 bill for the landscaping was paid in full during the year and capitalized on KM's Balance Sheet.
During the year, a new display case worth $2,000 was purchased and expensed on the books.
An amortization expense of $21,000 was deducted during the year. Total CCA (following any adjustments) for the year was $16,000 and is not reflected in the financial statements
The following were also expensed during the year
Auditing and Assurance Services A Systematic Approach
ISBN: 978-1259162343
9th edition
Authors: William Messier, Steven Glover, Douglas Prawitt