Question

The income statement has been prepared by Daisy Ltd$\text{'}$s accountant for the current year ending December $31,2023$ is as follow:

Sales $8,000,000$

Cost of goods sold $3,500,000$

Gross Profit $4,500,000$

Operating Expenses

General and administrative expense $($Note $1)(142,000)$

Meal and Entertainment$($Note $2)(31,000)$

Interest expense $($ Note $3)(1,650)$

Repairs and Maintenance $(62,000)$

Amortization expense $($Note $4)(150,000)(386,650)$

Operating Income $4,113,350$

Other Income and expense:

Interest Income $110,530$

Insurance expense $($Note $5)(3,200)$

Landscaping expense $($Noet $6)(20,000)$

Loss on disposal of limited life licence $(17,000)$

Leasehold Improvement $(45,000)$

Income before income tax expense $4,138,680$

Income tax expense $(170,000)$

Net Income $3,968,680$

Notes:

$1.$ General and administrative expense include:

Donations to registered charities $27,000$

Accrued bonus $50,000$

$($Accrued September, $2023,$ paid January $15,2024)$

Payroll Expenses $60,000$

Accounting and legal fees for amendments to articles of incorporation $5,000$

$2.$ Meals and entertainment expenses:

Memberships at golf club for salespeople $6,000$

Meals while enteretaining clients $18,500$

Annual summer BBQ for all staffs $6,000$

Christmas party for all staff $($accommodation $$1,200$ and meals $$9,000)10,200$

$3.$ Interest expese paid to CRA due to late payment of tax owing $1,500$

Interest expense paid to Bell Canada due to late payment of January's bill $150$

$4.$ Daisy Ltd$.$ follows a policy to claim the maximum CCA on all depreciable properties. The UCC balances as of January $1,2023,$ are as follows:

Class $81,250$

Class $1314,000$

Class $1468,000$

Class $10\mathrm{.}113,090$

a$.$ In $2023,$ a limited life licence to produce and sell costumes based on a popular theme park was sold for $$63,000.$ The original cost of this licence was $$95,000$ and its carrying value at the time of sale was $$80,000.$ The licence was the only property in class $14$

b$.$ Daisy Ltd purchases land and constructed a new office building on it during the year. An election was made to include the building in a separate class $1.$ The cost of the land was $$350,000,$ and the building cost $$475,000$ to construct.

c$.$ New furniture for the reception area was acquired during the year for $$1,200.$ Additionally, some outdated desks previously used by the finance department, with a cost of $$8,000,$ were sold for $$3,500.$ The net book value is also $$3,500$; consequently, no gains or losses are recorded in the accounting records.

d$.$ The company purchased a fuel car worth $$50,000$ for one of the salespersons to use for employment purposes.

e$.$ The company leases a building for $$27,000$ per year that houses a portion of its manufacturing operations. The lease was negotiated on January $1,2020,$ and has an original lease term of five years. There are two renewal options on the lease, each for two years. The company made $$28,000$ of leasehold improvements in $2020$ immediately after signing the lease. No further leasehold improvements were made until the current year $(2023).$

$5.$ Includes the annual insurance premiums amount to $$200$ for Daisy's life insurance plan and $$3,000$ for the business plan, aimed at safeguarding the business properties.

$6.$ The company expensed $$20,000$ for landscaping its main office building instead of capitalizing it due to its relatively low cost, as decided by the finance director.

Requirement:

PART I : $(19$ points $)$

Using an Excel workbook to prepare the Capital Cost Allowance $($CCA$)$ schedule and the UCC $($Undepreciated Capital Cost$)$ balance for Daisy Ltd$,.$

PART II: $(23$ points$)$

"Using an Excel workbook preapre a reconciliation schedule for Daisy Ltd$.$ Calculate the minimum net income for the $2023$ taxation year for Daisy Ltd$,.$ Provide a brief description of the items that are not included in your calculations.