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Calculate the effect of the above transactions on income

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Question - Kvetch Ltd. has operated one business with a December 31 year-end since its incorporation in 2018. It has made the following transactions:

August 2019 - incurred incorporation costs of $2,500

May 2020 - purchased a licence with an indefinite life for $11,755

June 2021 - purchased goodwill for $80,000

August 2023 - purchased a franchise with an indefinite life for $120,000

October 2025 - sold the licence for $50,000 purchased in May 2020

June 2026 - sold the franchise for $200,000 purchased in August 2023

Required - Calculate the effect of the above transactions on income from business, assuming that the maximum write-off is taken by the corporation in all of the years indicated. Assume that the transaction was an arm's length transaction. Please round off to the nearest dollar when you calculations.

 

Reference no: EM132612618

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