Morgon Inc. is a proprietorship owned by Helen Morgon. Its taxation year ends on December 31....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Morgon Inc. is a proprietorship owned by Helen Morgon. Its taxation year ends on December 31. For the current taxation year, Ms. Morgon's daughter, Summer, who keeps the books for the business, has calculated a Net Income for Morgon Inc. of $193,200. In calculating this figure, Summer used generally accepted accounting principles. Other Information: 1. During the year, Morgon Inc. spent $12,700 for landscaping the grounds around its office. In accordance with generally accepted accounting principles, this amount was treated as a capital expenditure. As the work was done late in the year, no amortization was deducted for the current year. 2. The following items were included in the accounting expenses: Amortization expense $69,300 Golf club membership fees for Helen and Summer 15,000 Cost of sponsoring local soccer teams 7,200 Advertising on a foreign television station (Directed at Canadian market) Advertising circulars (Only one-quarter distributed) Business meals and entertainment Charitable donations 9,600 12,400 22,000 31,900 Loss from theft 16,200 Interest paid on building mortgage 24,200 Interest paid on late income tax instalments 1,400 Appraisal costs on land to be sold 4,200 Damages resulting from breach of contract 3,800 3. Included in the accounting expenses were $14,000 in fees paid to Summer's 16 year old son for creating and maintaining the web site of Morgon Inc. In pricing this work, Helen found that it would cost at least $25,000 to obtain the equivalent services from an outside consultant. 4. Maximum CCA has been determined to be $94,200 for the current taxation year. 5. As the business is unincorporated, no taxes were deducted in calculating Net Income. Required: Calculate the minimum net business income for Morgon Inc. that will be included in Helen Morgon's tax return for the current taxation year. Indicate why you have not included any of the preceding items in your calculations. You must show indicate the following: . The amount If you are adding or subtracting the amount or if there is not change and, The citation in the Income Tax Act Morgon Inc. is a proprietorship owned by Helen Morgon. Its taxation year ends on December 31. For the current taxation year, Ms. Morgon's daughter, Summer, who keeps the books for the business, has calculated a Net Income for Morgon Inc. of $193,200. In calculating this figure, Summer used generally accepted accounting principles. Other Information: 1. During the year, Morgon Inc. spent $12,700 for landscaping the grounds around its office. In accordance with generally accepted accounting principles, this amount was treated as a capital expenditure. As the work was done late in the year, no amortization was deducted for the current year. 2. The following items were included in the accounting expenses: Amortization expense $69,300 Golf club membership fees for Helen and Summer 15,000 Cost of sponsoring local soccer teams 7,200 Advertising on a foreign television station (Directed at Canadian market) Advertising circulars (Only one-quarter distributed) Business meals and entertainment Charitable donations 9,600 12,400 22,000 31,900 Loss from theft 16,200 Interest paid on building mortgage 24,200 Interest paid on late income tax instalments 1,400 Appraisal costs on land to be sold 4,200 Damages resulting from breach of contract 3,800 3. Included in the accounting expenses were $14,000 in fees paid to Summer's 16 year old son for creating and maintaining the web site of Morgon Inc. In pricing this work, Helen found that it would cost at least $25,000 to obtain the equivalent services from an outside consultant. 4. Maximum CCA has been determined to be $94,200 for the current taxation year. 5. As the business is unincorporated, no taxes were deducted in calculating Net Income. Required: Calculate the minimum net business income for Morgon Inc. that will be included in Helen Morgon's tax return for the current taxation year. Indicate why you have not included any of the preceding items in your calculations. You must show indicate the following: . The amount If you are adding or subtracting the amount or if there is not change and, The citation in the Income Tax Act
Expert Answer:
Answer rating: 100% (QA)
Answer The minimum net business income for Morgon Inc that will be included in Helen Morgons tax ret... View the full answer
Posted Date:
Students also viewed these finance questions
-
The Phoenix Corporation's fiscal year ends on December 31. Phoenix determines inventory quantity by a physical count of inventory on hand at the close of business on December 31. The company's...
-
Generally accepted accounting principles (GAAP) notionally follow the matching principle. However, there are exceptions. Explain why the following accounting rules, required under GAAP, violate the...
-
The same generally accepted accounting principles apply to all companies.
-
Discuss the differences between @classmethod , @staticmethod , and instance methods in Python.
-
A population has a mean of 200 and a standard deviation of 50.Asimple random sample of size 100 will be taken and the sample mean will be used to estimate the population mean. a. What is the expected...
-
Consider a ten-year bond with a face value of $1000 that has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a...
-
A parallel-plate capacitor with air between the plates and plate separation distance \(d\) is connected to a battery that maintains a potential difference \(V_{\text {batt }}\) between the plates....
-
A technology problem has rendered some of the inventory at FFF obsolete. FFF estimates that the risk cost of its inventory is now 10 percent. (a) Calculate the new annual holding cost rate. (b)...
-
(a) A mutual fund raised Rs. 150 lakhs on April 1, 2018 by issue of 15 lakh units at Rs. 10 per unit. The fund invested in several capital market instruments to build a portfolio of Rs. 140 lakhs,...
-
The dependency diagram in Figure indicates that authors are paid royalties for each book that they write for a publisher. The amount of the royalty can vary by author, by book, and by edition of the...
-
On May 18, 1980, Mount Saint Helens in Washington state ejected into the atmosphere an estimated 540 million tons of ash [5]. (a) How does that compare with the emissions of PM10 from human...
-
What reinvestment rate is built into the NPV calculation? The IRR calculation?
-
What is done in the post-audit?
-
What are some advantages and disadvantages of stock repurchases?
-
For a firm that has adequate access to capital markets, is it more reasonable to assume reinvestment at the WACC or the IRR? Explain.
-
Your company must choose one of two mutually exclusive projects. Project A has an after-tax cost of $2,000 today and has after-tax cash flows of $1,500 per year for 4 years. Project B has an...
-
The Winterland DPW can purchase road salt from three different mines. Salt from any of these mines must be ordered in 100 ton quantities. Nearby DPW directors that Sarah spoke with stated lead times...
-
The following items were displayed in the statement of affairs for Lubbock Company: Fully secured liabilities ......... $90,000 Partially secured liabilities ....... 12,000 Unsecured liabilities...
-
What are common psychological, physical, and behavioral reactions associated with speech anxiety?
-
How can speakers use anxiety to their advantage?
-
What are some ways you can get comfortable with your audience?
Study smarter with the SolutionInn App