1. Clockworks Inc. is a small Canadian company that has been marginally successful over the past 5 years. Its net income for the year ended December 31, 20x12, as determined under Accounting Standards for Private Enterprises (ASPE) is as follows: Sales $375,000 Cost of goods sold 150,000 Gross profit 225,000 Selling expenses 50,400 General and administrative expenses 92,200 142,600 Income before provision for income taxes $82,400 Additional information for the year: § Selling expenses include: o Meals & Entertainment - $2,300 o Donation to a registered charity - $500 o Sponsorship of local, junior hockey team - $2,500 § General and administrative expenses include: o Penalty for filing income tax late - $500 o Administration fees related to arranging new debt - $2,200 § Cost of Goods Sold expenses include: o Depreciation of manufacturing equipment - $22,500 § Capital cost allowance on tangible assets was calculated to be $16,250 for the year § Clockworks Inc. has a non-capital loss carry-forward of $15,000 from 20x10 § Assume that Clockworks Inc. claims the maximum allowable CCA Based on the information provided, what is Clockworks Inc.’s 20x12 net income for tax purposes? a. $95,060 b. $92,560 c. $92,060 d. $77,560 2. Based on the information provided above, Clockworks Inc.’s taxable income will be $_________ __________ than its net income for tax purposes? a. $18,000 lower b. $ 3,000 lower c. $15,500 higher d. $15,500 lower CMA Accelerated Program – Winter XXXXXXXXXXWeek 7 Quiz 3. Better Bottles Inc. commenced operations on January 1, 20x9 when it purchased a patent for a recycling process that takes used food containers and converts them into plastic water bottles. Better Bottles Inc. purchased the patent for $120,000. At the time of purchase, the patent had a remaining legal life of 20 years. Also on January 1, 20x9, Better Bottles Inc. signed a lease for its manufacturing facility. The lease had a 5-year term with 3, 2-year renewal options. Better Bottles Inc. has a December 31st year-end. In 20x9, Better Bottles Inc. spent $100,000 to customize the manufacturing space. In 20x11, an additional $80,000 was spent on creating custom office space within the manufacturing facility. Assuming Better Bottles Inc. claims the maximum allowable CCA in all years, what is the UCC balance of the patent and the leasehold improvements respectively at the end of 20x12? a. $44,296, $105,999 b. $96,000, $105,999 c. $44,296, $112,856 d. $96,000, $112,856 4. Big Dave’s Delivery had the following opening UCC balances for the current taxation year. Class 10 (30%) $350,000 Class XXXXXXXXXX%) 19,000 Class 1 (4%) 82,000 During the current year two delivery trucks (Class 10) were sold for proceeds of $20,000 (original cost - $41,000) and $15,000 (original cost - $52,000). The trucks were replaced with a single new, bigger truck purchased at a cost of $62,250. In addition, Big Dave sold his Porsche for $25,000 (original cost - $59,000) and replaced it with a BMW SUV, which had a cost of $62,000. Based on this information, what is the maximum CCA that Big Dave’s Delivery can claim for the current taxation year? a. $119,718 b. $110,868 c. $118,818 d. $124,518