Famous Failures in Finance: Shady Trading at Enron Before it was known for its financial problems, Enron, a utility firm operating pipelines and shipping natural gas, had become famous as a business pioneer, blazing new trails in the market for trading risk. In the 1980s the price of natural gas was deregulated, which meant that its price could go down and up, exposing producers and consumers to risks. Enron decided to exploit new opportunities in the commodities business by trading natural gas futures. The natural gas futures that traded on the New York Mercantile Exchange did not take into account regional discrepancies in gas prices. Enron filled this void by agreeing to deliver natural gas to any location in the United States at any time. In addition to trading natural gas and other energy contracts, in the late 1990s Enron began trading weather derivatives for which no underlying commodities existed. These were just bets on the weather. Its weather-derivatives transactions were worth an estimated $3.5 billion in the United States alone. Thanks to its near-monopoly position in derivatives products, Enron’s trading business was initially highly profitable. At one point, the company offered more than 1,800 different contracts for 16 product categories, ranging from oil and natural gas to weather derivatives, broadband services, and emissions rights, and it earned 90% of its revenues from trading derivatives. And unlike traditional commodity and futures exchanges and brokers, Enron’s online commodity and derivative business was not subject to federal regulations. However, Enron eventually lost its unique position as the energy business started to mature. When other firms entered the online derivatives-trading business, they competed by charging lower commissions and exploiting the same regional price discrepancies that had been Enron’s bread and butter. Enron’s trading operations became less profitable. To find new markets and products, the company expanded into areas such as water, foreign power sources, telecommunications, and broadband services. The farther it moved from its core businesses of supplying gas, the more money Enron lost. The company sought to hide those losses by entering into more risky and bizarre financial contracts. When financial institutions began to realize that Enron was essentially a shell game, they withdrew their credit. At that point, despite rosy assurances from its founder and CEO Ken Lay, Enron went into a death spiral that ended in bankruptcy on December 2, 2001. In July 2004 Lay was indicted on 11 counts of securities fraud and related charges. He was found guilty on May 25, 2006, of all but one of the counts. Each count carried a maximum 5- to 10-year sentence and legal experts said Lay could face 20 to 30 years in prison. However, about three and a half months before his scheduled sentencing, Ken Lay died on July 5, 2006, while vacationing in Snowmass, Colorado. On October 17, 2006, as a result of his death, the federal district court judge who presided over the case vacated Lay’s conviction.

Please answer the questions.

Critical Thinking Questions: Could the Enron debacle have been prevented? If so, what actions should have been taken by auditors, regulators, and lawmakers? Please respond to the above questions.

What is a comprehensive look at the blending of theory and practice in Education which include Curriculum Instruction and Leadership into the blending of theory and practice? Please provide where information source(s) is coming from.

Below is a complete list of the Educational Leadership Constituent Council (ELCC):

Educational Leadership Constituent Council (ELCC) Standards

· Educational Vision – An educational leader who guides, facilitates, and supports the success of all learners by developing, articulating, implementing, and evaluating an educational vision that is shared and supported by the greater school community.

· School Culture – An educational leader who guides, facilitates, and supports the success of all learners by advocating, nurturing, and sustain a school culture that is shared and supported by the greater school community.

· Management – An educational leader who guides, facilitates, and supports the success of all learners by managing operations and resources to provide a safe, efficient, and effective learning environment.

· Communication and Collaboration with Communities – An educational leader who guides, facilitates, and supports the success of learners by practicing open, two-way communication and using collaborative strategies that respond to diverse community interests and needs. Acting with Honesty, Fairness, and Professional Ethics – An educational leader who guides, facilitates, and supports the success of all learners by personally demonstrating and promoting honesty, fairness, and professional ethics.

· The Political, Social, Legal, Economic, and Cultural Environments – An educational leader who guides, facilitates, and supports the success of all learners by understanding, responding to, and influencing larger political, social, legal, economic, and cultural environments and by recommending and implementing policy that guides district operations.

Internship Practicum (Field Experience) of Standards-based Work in Real Settings – An educational leader synthesizes and applies the knowledge and practice to develop the skills identified in Standards 1-6 through substantial, sustained, standards-based work that is planned and guided cooperatively by the institution and school district personnel (or university, college, or business personnel as appropriate).

Subject is Education

The purpose of the Conceptual Framework (CF) as it relates to is to provide a foundation and organizational system through accomplishment of the primary objective,

Standard 1: Human Capital Management Educational leaders use their role as human capital manager to drive improvements in building leader effectiveness and student achievement.

Standard 2: Instructional Leadership Educational leaders are acutely focused on effective teaching and learning, possess a deep and comprehensive understanding of best instructional practices, and continuously promote activities that contribute to the academic success of all students.

Standard 3: Personal Behavior Educational leaders model personal behavior that sets the tone for all student and adult relationships.

Standard 4: Building Relationships Educational leaders build relationships to ensure that all key stakeholders work effectively with each other to achieve transformative results.

Standard 5: Culture of Achievement Educational leaders develop an encompassing culture of achievement aligned to the institution’s vision of success for every student.

Standard 6: Organizational, Operational, and Resource Management Educational leaders’ leverage organizational, operational, and resource management skills to support improvement and achieve desired educational outcomes.

Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program. Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent. The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent. Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. His room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 5.5 percent.

1.

A)How does Ben’s age affect his decision to get an MBA?

B) What other, perhaps nonquantifiable, factors affect Ben’s decision to get an MBA?

C) Assuming all salaries are paid at the end of each year, what is the best option for Ben from a strictly financial standpoint?

Ben bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow hi to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.

Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a saving account with enough money to cover the entire cost of his MBA program.

The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase a 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.

The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent.

Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. HIs room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 5.5 percent.

5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision?

THE MBA DECISION

Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although Internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.

Ben Currently works at the money management firm of Dewey and Louis. His Annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program.

         The Ritter College of Business at Wilton University is one of the top MBA programs in the Country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.

The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be at 29%.

         Both Schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. His room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 5.5 percent.

Wilton MBA:

Costs:

Total direct costs = $58,000 + 2,000 + 3,000 – 4,000 = $59,000

PV of direct costs = $59,000 + 59,000 / (1.055) = $114,924.17

Salary:

PV of after-tax bonus paid in 2 years = $10,000(1 – .31) / 1.0552 = $6,199.32

After-tax salary = $87,000(1 – .31) = $60,030

Mount Perry MBA:

Cost: Total direct: $75,000 + 4,200 + 3000 – 4000 = $78,200

How to find the direct cost and salary for Mount Perry MBA?

3. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

a. Phil won $840 in the scratch-off state lottery. There is no state income tax.

Amount to be included?

4. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

b. Ted won a compact car worth $25,200 in a TV game show. Ted plans to sell the car next year.

Amount to be included?

5. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

c. Al Bore won the Nobel Peace Prize of $795,000 this year. Rather than take the prize, Al designated that the entire award should go to Weatherhead Charity, a tax-exempt organization.

Amount to be included?

6. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

d. Jerry was awarded $4,250 from his employer, Acme Toons, when he was selected most handsome employee for Valentine’s Day this year.

Amount to babe included?

7. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

e. Ellen won a $1,370 cash prize in a school essay contest. The school is a tax-exempt entity, and Ellen plans to use the funds to pay her college education.

Amount to be included?

8. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

f. Gene won $325 in the office March Madness pool.

Amount to be included?

9. For each of the following situations, indicate how much the taxpayer is required to include in gross income: (Leave no answer blank. Enter zero if applicable.)

a. Steve was awarded a $8,850 scholarship to attend State Law School. The scholarship pays Steve's tuition and fees.

Amount to be included?

10. For each of the following situations, indicate how much the taxpayer is required to include in gross income: (Leave no answer blank. Enter zero if applicable.)

b. Hal was awarded a $14,500 scholarship to attend State Hotel School. All scholarship students must work 25 hours per week at the School residency during the term.

Amount to be included?

11. Irene is disabled and receives payments from a number of sources. The interest payments are from bonds that Irene purchased over past years and a disability insurance policy that Irene purchased herself.

Calculate Irene’s gross income.

Gross income?

What is a comprehensive look at the blending of theory and practice in Education which includes Policies, Procedures, and People into the blending of theory and practice?

Please provide reference source with answer, the answer should be in line with ELCC and CF Standards below.

The purpose of the Conceptual Framework (CF) as it relates to is to provide a foundation and organizational system through accomplishment of the primary objective,

Standard 1: Human Capital Management Educational leaders use their role as human capital manager to drive improvements in building leader effectiveness and student achievement.

Standard 2: Instructional Leadership Educational leaders are acutely focused on effective teaching and learning, possess a deep and comprehensive understanding of best instructional practices, and continuously promote activities that contribute to the academic success of all students.

Standard 3: Personal Behavior Educational leaders model personal behavior that sets the tone for all student and adult relationships.

Standard 4: Building Relationships Educational leaders build relationships to ensure that all key stakeholders work effectively with each other to achieve transformative results.

Standard 5: Culture of Achievement Educational leaders develop an encompassing culture of achievement aligned to the institution’s vision of success for every student.

Standard 6: Organizational, Operational, and Resource Management Educational leaders’ leverage organizational, operational, and resource management skills to support improvement and achieve desired educational outcomes.

Below is a complete list of the Educational Leadership Constituent Council (ELCC):

Educational Leadership Constituent Council (ELCC) Standards

· Educational Vision – An educational leader who guides, facilitates, and supports the success of all learners by developing, articulating, implementing, and evaluating an educational vision that is shared and supported by the greater school community.

· School Culture – An educational leader who guides, facilitates, and supports the success of all learners by advocating, nurturing, and sustain a school culture that is shared and supported by the greater school community.

· Management – An educational leader who guides, facilitates, and supports the success of all learners by managing operations and resources to provide a safe, efficient, and effective learning environment.

· Communication and Collaboration with Communities – An educational leader who guides, facilitates, and supports the success of learners by practicing open, two-way communication and using collaborative strategies that respond to diverse community interests and needs. Acting with Honesty, Fairness, and Professional Ethics – An educational leader who guides, facilitates, and supports the success of all learners by personally demonstrating and promoting honesty, fairness, and professional ethics.

· The Political, Social, Legal, Economic, and Cultural Environments – An educational leader who guides, facilitates, and supports the success of all learners by understanding, responding to, and influencing larger political, social, legal, economic, and cultural environments and by recommending and implementing policy that guides district operations.

· Internship Practicum (Field Experience) of Standards-based Work in Real Settings – An educational leader synthesizes and applies the knowledge and practice to develop the skills identified in Standards 1-6 through substantial, sustained, standards-based work that is planned and guided cooperatively by the institution and school district personnel (or university, college, or business personnel as appropriate).

Subject is Education

Additional Instructions:

Show all calculations and include clear explanations.  

Case Problem:

Over the past several years, decommissioned U.S. warships have been turned into artificial reefs in the ocean by towing them out to sea and sinking them.  The thinking was that sinking the ship would conveniently dispose of it while providing an artificial reef environment for aquatic life.  In reality, some of the sunken ships have released toxins into the ocean and have been costly to decontaminate.  In the late 1990s, at least two international conventions have made it all but impossible to export used warships for salvage without removing all military equipment, conducting a complete cleanup and cutting the ship into such comparatively small pieces as to make the entire exercise relatively expensive.

The new environmental regulations have made disposal of ships an expensive project.  The United States has hundreds of mothballed warships, presenting an extremely expensive problem for military authorities and the government.  Now the U.S. government is taking bids to instead dismantle and recycle ships that have recently been decommissioned (but have not been sunk yet.)

Assume that a recently decommissioned aircraft carrier, the USS Blaze, is estimated to contain 40 tons of recyclable materials able to be sold for approximately $32.8 million.  About 90% of the value in old ships is the metals, including steel, copper, copper alloys, and lead that can be removed, sold for remelting, and reformed into new metal products.  There are also some high-value metals; such as, nickel alloys, stainless steel, and titanium that can be found in some parts of all warships but may be present is such small quantities that recovery and resale may not be cost effective. The low bid for dismantling and transporting the ship materials to appropriate facilities is $34.5 million. Recycling and dismantling the ship would create about 500 jobs for about a year on the West Coast area.  This geographic area has been experiencing record-high unemployment rates in recent years.

As an alternative, reefing these ships would create new habitats for underwater life and can be done using newer environmentally safe methods.  These new artificial reefs would enhance fishery resources and facilitate the access and utilization by recreational and commercial fishermen. Artificial reefs can also increase tourism by attracting sport divers for recreational purposes.  Academic organizations may be interested in using the site to study fish and other marine life which may open the door for more funding from these research activities.  Research has shown that a new reef will attract 60,000 – 70,000 divers and add more than 10 million to the local tourism industry.  Research has also shown that artificial reefs can substantially increase the population of reef-associated species.  Within months the G. B. Churchartificial reef in British Columbia had hundreds of encrusted individuals on its hull and within 2.5 years had seen an increase of nearly 100 species.  

Reefing the ship would cost an estimated 800K (or $0.8 million) which includes cleaning of the vessel of toxics, oils and greases, PCB containing electrical and electronic equipment and other readily removable PCB containing equipment, local towing and docking, preparation (unspecified) and other incidental overhead items, insurance, and making the vessels safe for divers (diverizing).  There will also be yearly maintenance costs in perpetuity.

1. Is it more financially advantageous to sink the ship or to dismantle and recycle it?  Show your calculations.  (Worth 4 pts.)

2.From a sustainability standpoint, what should be done with the decommissioned aircraft carrier? (Worth 4 pts.)  

3.List some of the other quantitative and qualitative factors that should enter into this analysis. (Worth 10 pts.)

4.As a taxpayer(s), which action would you prefer (sink or recycle)?  Defend your answer.  (Worth 4 pts.)

Additional Instructions:

Show all calculations and include clear explanations.  

Case Problem:

Over the past several years, decommissioned U.S. warships have been turned into artificial reefs in the ocean by towing them out to sea and sinking them.  The thinking was that sinking the ship would conveniently dispose of it while providing an artificial reef environment for aquatic life.  In reality, some of the sunken ships have released toxins into the ocean and have been costly to decontaminate.  In the late 1990s, at least two international conventions have made it all but impossible to export used warships for salvage without removing all military equipment, conducting a complete cleanup and cutting the ship into such comparatively small pieces as to make the entire exercise relatively expensive.

The new environmental regulations have made disposal of ships an expensive project.  The United States has hundreds of mothballed warships, presenting an extremely expensive problem for military authorities and the government.  Now the U.S. government is taking bids to instead dismantle and recycle ships that have recently been decommissioned (but have not been sunk yet.)

Assume that a recently decommissioned aircraft carrier, the USS Blaze, is estimated to contain 40 tons of recyclable materials able to be sold for approximately $32.8 million.  About 90% of the value in old ships is the metals, including steel, copper, copper alloys, and lead that can be removed, sold for remelting, and reformed into new metal products.  There are also some high-value metals; such as, nickel alloys, stainless steel, and titanium that can be found in some parts of all warships but may be present is such small quantities that recovery and resale may not be cost effective. The low bid for dismantling and transporting the ship materials to appropriate facilities is $34.5 million. Recycling and dismantling the ship would create about 500 jobs for about a year on the West Coast area.  This geographic area has been experiencing record-high unemployment rates in recent years.

As an alternative, reefing these ships would create new habitats for underwater life and can be done using newer environmentally safe methods.  These new artificial reefs would enhance fishery resources and facilitate the access and utilization by recreational and commercial fishermen. Artificial reefs can also increase tourism by attracting sport divers for recreational purposes.  Academic organizations may be interested in using the site to study fish and other marine life which may open the door for more funding from these research activities.  Research has shown that a new reef will attract 60,000 – 70,000 divers and add more than 10 million to the local tourism industry.  Research has also shown that artificial reefs can substantially increase the population of reef-associated species.  Within months the G. B. Churchartificial reef in British Columbia had hundreds of encrusted individuals on its hull and within 2.5 years had seen an increase of nearly 100 species.  

Reefing the ship would cost an estimated 800K (or $0.8 million) which includes cleaning of the vessel of toxics, oils and greases, PCB containing electrical and electronic equipment and other readily removable PCB containing equipment, local towing and docking, preparation (unspecified) and other incidental overhead items, insurance, and making the vessels safe for divers (diverizing).  There will also be yearly maintenance costs in perpetuity.

1. Is it more financially advantageous to sink the ship or to dismantle and recycle it?  Show your calculations.  (Worth 4 pts.)

2.From a sustainability standpoint, what should be done with the decommissioned aircraft carrier? (Worth 4 pts.)  

3.List some of the other quantitative and qualitative factors that should enter into this analysis. (Worth 10 pts.)

4.As a taxpayer(s), which action would you prefer (sink or recycle)?  Defend your answer.  (Worth 4 pts.)

Simone Cherniak has just completed the second year of operating her veterinary clinic. You have been retained by Cherniak for tax assistance and advice. At a recent meeting, you gathered information on her practice, which is presented below.

For the year ended December 31, 2019, the clinic showed a profit of $149,700, as follows:

Included in the above is depreciation/amortization expense of $27,800 on fixed assets and amortization of development costs of $5,300. Additional information is outlined below.

1.        On February 28, 2019, Cherniak purchased a competitor’s business and merged it with her own. The following assets were acquired:

2.        During the year, Cherniak designed and patented a new surgical instrument. On July 1, 2019, a legal fee of $4,800 was paid for the patent (life of 20 years) registration; this amount is included in administration expenses. In October, $19,400 was spent on consultants to research metal alloys, and this cost is being amortized as development costs in the financial statement.

3.        Professional services revenue includes the value of unbilled services compiled from a work-in-progress file. At December 31, 2019, unbilled services amounted to $19,400, compared with $2,500 at the same time last year. In 2018, Cherniak had made an election under section 34 of the Income Tax Act to exclude work in progress from income.

4.        Some of the items included under administrative and other expenses are as follows:

5.        The income statement includes a cost of $3,900 for attending three conventions during the year. Convention #1 ($900) was in July 2019. Conventions #2 ($1,700) and #3 ($1,300) were both in December 2019. Each convention includes a cost of ($140) for meals. For each of the December conventions, the airfare of ($290) was included in accounts payable at the end of the year.

6.        Vehicle costs include operating costs of $2,900 for the automobile (including $400 for car parking). The automobile was driven 24,000 km. Of this, 12,000 km was for customer travel, 2,000 km was for travel between her home and the clinic, and 10,000 km was for personal travel.

7.        Cherniak expects that a number of the new manufactured surgical instruments will be returned for modification, which she will do at no extra cost to the customer. The income statement includes a $2,400 deduction based on her estimate of the returns. As of December 31, 2019, $1,000 of costs were incurred for returned items.

8.        Cherniak moved from rented premises to new rented premises on February 28, 2019, with 20 months remaining on the old lease. The landlord accepted a payment of $9,700 in exchange for cancelling the lease. The accounting records have amortized this cost over the remainder of the lease term and accordingly have deducted $4,850 as rent expense.

9.        Capital cost allowance (CCA) for tax purposes has been correctly calculated as $18,200.

Required:

Determine Cherniak’s net income from business for tax purposes for the 2019 taxation year.