Bingo Ltd. (“the Company”) has a fiscal year ending December 31….

Question Bingo Ltd. (“the Company”) has a fiscal year ending December 31…. Bingo Ltd. (“the Company”) has a fiscal year ending December 31. For the year ending December 31, 2021, the Company’s income statement is as follows: Revenues                                                                             $1,093,000Expenses:                                                                                                   Cost Of Goods Sold                            ($206,000)      Administrative Costs                           ( 152,000)      Amortization Expense                         ( 186,000)      Increase in warranty reserves                 (32,000)      Other Expenses                                   ( 119,000)               ( 695,000)Income Before Tax Expense                                                     $398,000Income Tax Expense:      Current                                             ($ 104,000)      Future                                                 (  47,000)               ( 151,000)Net Income                                                                             $247,000 Other Information: 1.   During the year, $8,000 was spent on landscaping for its new facilities.  For accounting purposes this was capitalized as an asset.  The Company believes the work has an unlimited life and has decided not to amortize this balance.   2.   The Company incurred legal costs to make amendments to its articles of incorporation in 2021. These legal costs totalling $9,500 were included in Other Expenses. 3.   On January 1, 2021, the Company has UCC balances for its tangible assets as follows: Class 1 (4% CCA rate)                                                    $450,000Class 14.1 (5% CCA rate)                                                         Nil The Class 1 balance relates to a single building acquired in 2007 at a cost of $600,000 including the surrounding land.  The value and cost of the land at the time of acquisition was $50,000.  On February 10, 2021, this building and the land are sold for a total of $662,000.  The value of the land is unchanged at $50,000.  In the accounting records, this real property was carried at $557,000, $507,000 for the building and $50,000 for the land.  The resulting gain on the building is included in the accounting revenues.The old building is replaced on February 15, 2021 with a new building acquired at a cost of $733,000 of which $60,000 is allocated to land.  The Company chose not to put the new building into a separate Class 1 so it does not qualify for the 6 percent CCA rate.  No elections are made with respect to the replacement of the building. 4.   The Company was late on paying some income tax instalments as well as some municipal tax payments, resulting in interest being incurred in the amounts of $780 and $320, respectively. This interest was included in Other Expenses. 5.   The Company would like to deduct the maximum CCA allowable for the year.   —REQUIRED Explain, in words, the reason for the inclusion (or exclusion) of each item in your calculation of the Company’s net income in Part A. You can use point form. [15 Marks]   Law Social Science Tax law Share QuestionEmailCopy link Comments (0)