prob037 - Problem 37 (Past exam question: 41 minutes)...

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Problem 37 (Past exam question: 41 minutes) (Text: Chs. 6-9) Each of the following five situations is independent. Part A (9 minutes) Spencer Stable owns 50% of the outstanding shares of Stable Estates Limited. His sister, Tracy, owns the other 50%. During the winter months, the company's construction activities are rather slow so Spencer uses this time to design new homes for the spring. At the beginning of January, to keep the company's largest subcontractor busy over the long winter months, he asked the subcontractor to build an addition to his ski chalet so that he can use it to entertain guests. The controller of Stable Estates Limited has expensed the $40,000 invoice from the subcontractor. Spencer had told the controller to treat the invoice as a business expense. Required : If the CRA were to discover this transaction during its audit, how would it reassess? Part B (14 minutes) Mrs. Worker, a computer consultant, did some work for Macrohard Inc. The agreed fee for her work was $12,000. Her husband is out of work; therefore, she
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prob037 - Problem 37 (Past exam question: 41 minutes)...

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