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Sharp is a musician who paid $500 in 2002 for an indefinite-life licence to perform in the subway walkway areas In 2007 Sharp decided to try a different approach to developing a following

Sharp is a musician who paid $500 in 2002 for an indefinite-life licence to perform in the subway walkway areas. In 2007, Sharp decided to try a different approach to developing a following. He purchased the name of a popular local band that stopped performing earlier that year. The cost of the name was $16,128 and the appropriate amount was included in the January 1, 2008 balance below. In 2008, he purchased an indefinite-life licence from the city for $5,000 which allowed him to perform on a street corner on Saturday afternoons. In 2009, Sharp found that he wanted to spend more time in the studio, so he sold the street corner licence for $6,000. In 2012, Sharp decided to break up his band and pursue a career as an accountant. He sold the band name for $20,000. Sharp has not yet filed his tax return for 2012. The year-end of the business is December 31. The following information is available with respect to the cumulative eligible capital account: (a) The balance in the cumulative eligible capital account, on January 1, 2008, was $11,492, and (b) The total cumulative eligible capital amount claimed prior to 2008 was $979. REQUIRED Prepare a schedule calculating the balance of the cumulative eligible capital account on January 1, 2013, and calculating the impact on income for 2012.

Jun 16 2020 View more View Less

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