Reference no: EM133030784

Question - Jaxtor Inc. is a Canadian public company that uses a December 31 taxation year. As a public company it must provided financial statements based on generally accepted accounting principles. For the year ending December 31, 2020, these financial statements show an accounting Net Income of $543,267.

In order to assist in preparing the Company's 2020 tax return, the following additional information is available.

1. The Company's financial statements disclosed interest on the Company's bonds payable of $12,460. This included discount amortization of $460.

2. The financial statements show a charge for amortization of $62,500. Maximum CCA on these assets, which the Company intends to deduct, would be $71,300. This does not include any CCA on Class 14.1 assets.

3. During 2019, as part of a business combination transaction, the Company acquired goodwill of $189,000. The Company's accountant found that there was no impairment of this amount during 2019.

4. During 2020, the Company sold temporary investments for $13,450. The adjusted cost base of these investments was $9,980.

5. During 2020, the Company donated a Class 10 depreciable asset to a registered charity. It received a charitable donations receipt for the $132,000 fair market value of the asset. The asset had a capital cost of $117,000 and a net book value in the accounting records of $105,300. The UCC balance in Class 10 was $94,670. Other assets remained in Class 10.

6. At the beginning of 2020, the Company had a liability for estimated warranties of $6,240. During the year, warranty costs were incurred in the amount of $5,650 and, at the end of the year, the remaining warranty liability was estimated to be $4,890.

7. During the year, the Company disposed of Class 8 depreciable assets with a capital cost of $79,000 and a net book value of $68,000 for cash proceeds of $71,000. At the beginning of the current year, the UCC balance in Class 8 was $66,720. These were the last assets in Class 8 and they were not replaced prior to the end of the year.

Required - For each of the preceding pieces of information, indicate the adjustment(s) that would be required to convert the Company's $543,267 accounting Net Income to minimum Net Income For Tax Purposes. Explanations for the adjustments are not required and no calculation of the total Net Income For Tax Purposes is required.