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Homework answers / question archive / Question 1   Sustainable Solutions (“SS”) is a Canadian corporation located in Burnaby, BC that sellsenvironmentally friendly cleaning products

Question 1   Sustainable Solutions (“SS”) is a Canadian corporation located in Burnaby, BC that sellsenvironmentally friendly cleaning products

Finance

Question 1   Sustainable Solutions (“SS”) is a Canadian corporation located in Burnaby, BC that sellsenvironmentally friendly cleaning products. They started out with only Canadian productsales but have expanded sales into the United States over the last few years. Their onlybuilding is in Burnaby but their Canadian sales occur equally across BC and Alberta.Given the following financial information, and assuming the foreign tax credit is equal to the amount withheld, calculate SS’s total Part I taxes payable for 2018 assuming:a) SS is a CCPCb) SS is a Canadian Public CompanyProduct Sales – Canada $110,000Expenses related to Canadian product sales $50,000Product Sales – US (expressed in Cdn $) $70,000Expenses related to US products sales (expressed in Cdn $)$30,000US taxes withheld $2,000Interest income – Canadian operating bank account $500Rental income – warehouse space* $6,000Rental income – vacant land** $10,000Capital gain on sale of computer equipment*** $5,000Recapture on sale of computer equipment*** $3,500Dividends – shares of Telus Corporation $1,200Net Capital loss carryover**** $500* The Company is using 95% of its warehouse space for product manufacturing and sales. As the other 5% is not currently needed, they are renting it out to TYT Ltd for storage. TYT signed a 7 year lease for the use of this space**SS owns a parcel of land down the street from their current warehouse. They don’tanticipate needing the land for their own use so are renting it out to a local movie theater to use as a parking lot***the computer equipment was used 100% for tracking inventory and sales of SS’s products****SS always applies net capital losses at the earliest possible opportunity

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