Francis is an experienced businessman working in the hospitality industry for many years….

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Francis is an experienced businessman working in the hospitality industry for many years. He has

recently purchased an old restaurant. The commercial kitchen in the restaurant was in poor

condition. Replacing the whole commercial kitchen will cost Francis $23,000. The cost of repairing

the kitchen appliances will be $4,900, however some parts may not be available in the market

anymore as these appliances are too old and obsolete. Francis decided to replace the commercial

kitchen with brand new modern appliances because new modern appliances in the market have

better features and durability.

Advise Francis on the deductibility of the above transactions. Your advice must be supported by

reference to relevant legislation and principles of tax law.

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