Quantro Enterprises Ltd. and Baizley Holdings Ltd. (BHL) are both 100% owned by Harold Baizley. Both companies are Canadian-controlled private corporations. Quantro operates a wholesale business and pays rent to BHL for the use of a warehouse property.BHL owns only one asset-the warehouse building and related land that is rented by Quantro for $36,000 per year. The property wasoriginally owned by Quantro but was sold to BHL several years ago as a means to reduce the risk exposure of this appreciating asset.On December 31, 2023 (the year-end of both companies), BHL sold the warehouse property to a third party for $370,000 (land$40,000, building $330,000). The property originally cost $320,000 (land $25,000, building $295,000). The undepreciated capitalcost of the building at December 31, 2022, was $254,000.One month before selling the warehouse property, BHL purchased a newly constructed warehouse property for $480,000. (land$50,000, building $430,000.).Required:Determine BHL's net income for tax purposes for 2023.RentCCA on new warehouseRecapture of CCAProperty IncomeLand Taxable capital gainsBuilding: Taxable capital gainsTaxable Capital Gains0Net Income for Tax purposes$0

An asset's profit on sale that has gained in value during the holding term is known as a capital…

Answered: Quantro Enterprises Ltd. and Baizley…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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