sol11-9 - Problem 11-9S SOLUTION (Past exam question: 34...

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Problem 11-9S SOLUTION (Past exam question: 34 minutes) Part A (27 minutes) Perfect Printer Ltd. is deemed to have a year-end immediately before the acquisition of control, May 31, 2011 [ssec. 249(4)]. Tax returns will have to be filed for this short year (i.e., five months, January 1 to May 31) and amounts, such as CCA, will have to be prorated. Time restrictions on carryovers will be shortened by one taxation year. The $6,000 accrued loss on the marketable securities will be deemed to be a capital loss for the period ended May 31, 2011 [par. 111(4)( d )]. The adjusted cost base of the securities will be reduced to their fair market value of $3,000 [par. 111(4)( c )]. The loss for the deemed taxation year ended May 31, 2011 is computed as follows: Net taxable capital gains: Capital gains $ Nil Capital loss (6,000 ) $ Nil Business loss: Loss from business, January 1 to May 31 (40,000) Add: Inventory accrued loss [ssec. 10(1)] (10,000) Cl. 8 furniture and equipment accrued loss [ssec.111(5.1)]
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sol11-9 - Problem 11-9S SOLUTION (Past exam question: 34...

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