QUESTION TWO

Sharp Ltd$.$ incurred the following expenses in the current year:

$$25,000$ in legal and accounting fees with respect to the issue of a new class of preferred shares

$$8,000$ for landscaping around the office building

$$1,200$ in interest paid to the CRA for late income tax instalments

$$2,700$ in interest on funds borrowed to finance the purchase of new office equipment

$$40,000$ in scientific research and experimental development expenditures

$$80,000$ in stock$-$based compensation expense

Comment on the deductibility for tax purposes of each of the expenses.

CPA Competency $6\mathrm{.}2\mathrm{.}2$ Common Schedule $1$ adjustments. Income tax reference: ITA $18,20(1),37(1).(2).$