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 bank loan during year for $75,000 to allow for an outdoor sales area during warm weather.Interest expense on the loan for the year was $9,600,and the cost to prepare the loan was $1,000.Both the interest and the preparation costs were expensed by KM.
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 the Balance Sheet.
Amortization expense of $21,000 was deducted during the year.CCA of $16,000 was accurately recorded in the tax accounts,but was not transferred to the financial statements.
During the year,a new display case worth $2,000 was expensed on the books.
The following were also expensed during the year:
On December 30^th,KM's president announced a bonus to be paid to the company's key employee in the amount of $5,000,which was expensed that day.The employee will receive the bonus in 20X1 in equal payments of $2,500,to be issued on January 30^th and July 30^th.
Required:
Determine KM Ltd.'s net income for tax purposes for 20X0

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 bank loan during year for $75,000 to allow for an outdoor sales area during warm weather.Interest expense on the loan for the year was $9,600,and the cost to prepare the loan was $1,000.Both the interest and the preparation costs were expensed by KM.
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 the Balance Sheet.
Amortization expense of $21,000 was deducted during the year.CCA of $16,000 was accurately recorded in the tax accounts,but was not transferred to the financial statements.
During the year,a new display case worth $2,000 was expensed on the books.
The following were also expensed during the year:

On December 30^th,KM's president announced a bonus to be paid to the company's key employee in the amount of $5,000,which was expensed that day.The employee will receive the bonus in 20X1 in equal payments of $2,500,to be issued on January 30^th and July 30^th.
Required:
Determine KM Ltd.'s net income for tax purposes for 20X0

Quizplus · Accepted Answer

The Answer of 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 bank loan during year for $75,000 to allow for an outdoor sales area during warm weather.Interest expense on the loan for the year was $9,600,and the cost to prepare the loan was $1,000.Both the interest and the preparation costs were expensed by KM. 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 the Balance Sheet. Amortization expense of $21,000 was deducted during the year.CCA of $16,000 was accurately recorded in the tax accounts,but was not transferred to the financial statements. During the year,a new display case worth $2,000 was expensed on the books. The following were also expensed during the year: On December 30^th,KM's president announced a bonus to be paid to the company's key employee in the amount of $5,000,which was expensed that day.The employee will receive the bonus in 20X1 in equal payments of $2,500,to be issued on January 30^th and July 30^th. Required: Determine KM Ltd.'s net income for tax purposes for 20X0

KM Ltdis a Canadian-Controlled Private Corporation,operating a Small Gift Store in in Vancouver.The