AQ-Bus-Sol - 1 Prepaid advertising 6,000 1 Meals and...

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ASSIGNMENT PROBLEM BUSINESS INCOME SUGGESTED SOLUTION (a) Net Income for Tax Purposes Accounting net income $840,000 1 Add: Prepaid advertising $ 2,000 1 U.S. advertising 5,000 1 Bond amortization 8,000 1 Instalment interest 4,000 1 Interest on loan to subsidiary 3,500 1 Amount embezzled 35,000 1 Accrued landscaping 23,000 1 Depreciation 200,000 1 Reserve for inventory obsolescence 15,000
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Unformatted text preview: 1 Prepaid advertising 6,000 1 Meals and entertainment 21,000 1 Charitable contributions 21,500 1 Political contributions 16,300 1 Appraisal costs 4,200 1 Loss of subsidiary 45,000 1 Personal life insurance 350 409,850 1 1,249,850 Deduct: Goods delivered in 2005 8,000 2 Capital cost allowance 340,000 348,000 1 Net income for tax purposes $901,850 20...
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