For the year ended December 31, 2019, Edward n Legend Inc., a CCPC, reported accounting net income

Fantastic news! We've Found the answer you've been seeking!

Question:

For the year ended December 31, 2019, Edward n’ Legend Inc., a CCPC, reported accounting net income of $147,000. The accountant provided the following information that was used in the determination of the accounting net income:

1. The Company recorded a current income tax expense of $129,000.

2. The Company spent $6,000 during the year on landscaping for its new building. For accounting purposes, this was treated as an asset. The Company will not amortize this balance as it believes the work has an unlimited life.

3. The Company’s expenses included $15,000 in business meals and entertainment. $5,000 of this pertains to a Christmas party available to 5 sales employees in the Vancouver office. The Vancouver office is home to 30 employees in total

. 4. The Company’s expenses included membership fees for several employees in a local golf and country club. These fees totaled $3,400.

5. The Company’s expenses included contributions to registered charities of $3,700

6. The Company’s expenses included interest on late income tax instalments of $500 and interest on late municipal tax payments of $275.

7. The Company’s expenses included a speeding ticket for $400.

8. The Company’s expenses included $5,000 for damages for failure to perform a service contract. The amount was paid when the client threatened to sue for breach of contract. The $5,000 was expensed in the current year for accounting purposes.

9. The Company’s wages and salaries includes a $35,000 bonus to its CEO. Because the CEO anticipates retiring at the end of 2020, this bonus will not be paid until January 2021.

10. The Company incurred $5,500 of interest expenses related to a line of credit that was used to finance seasonal fluctuations in inventory.

11. In determining the cost of sales, the Company deducted a $17,800 reserve for inventory obsolescence.

12 During the period January 1, 2019 through August 31, 2019, the Company declared and paid dividends of $27,600.

REQUIRED. Compute the Company’s Net Income for Tax Purposes (NIFTP) for the year ended December 31, 2019. Disregard CCA. Indicate why you have or have not included any of the preceding items in your calculations.