The election under s. 85D(1) of the pre-1972 Act was not available for accounts receivable included in a business purchased by the taxpayer from a non-resident vendor who did not carry on business in Canada given that the vendor accounted for accounts receivable on a cash basis and because the provision did not apply to a vendor who is a non-resident of Canada and is not doing business in Canada. Mr. Davis stated (at p. 697):
"... the section taken as a whole, which, in my opinion, is the way in which it must be interpreted, is intended to apply to persons who fall to be taxed or otherwise dealt with under the provisions of the Canadian Income Tax Act and who report to the Canadian Government the income arising from the operation of the business or businesses whose sale is the central concern of the said section 85D. That section is, in my opinion, intended to afford a continuity in the treatment of accounts receivable where the sale of a business intervenes ... ."