Homework Problems 5-2, 5-4

# Homework Problems 5-2, 5-4 - Solution to Problem 5-2 Part A...

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Solution to Problem 5-2 Part A : Mr. Taylor purchases a rental building for \$255,000 and furniture for \$12,800 on February 1 st . Class 1 Class 8 (4%) (20%) Purchases during the year \$255,000 \$12,800 To Calculate CCA during the 1 st year: UCC at the Beginning of the year \$ 0 \$ 0 Add One-Half of Net Additions \$127,500 \$ 6,400 CCA Base \$127,500 \$ 6,400 Maximum CCA: (4%)(\$127,500) ( 5,100) (20%)(\$6,400) ( 1,280) Add Back One-Half of Net Additions \$127,500 \$ 6,400 UCC at year end \$249,900 \$11,520 Max. CCA < Rent of \$15,100

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nd year, tenants purchase furniture for \$10,400. To Calculate the CCA during the 2 nd year: On the Furniture : UCC as of January 1 \$11,520 Deduct Dispositions during the year: Lesser of: (a) capital cost \$12,800 (b) proceeds of disposition \$10,400 (\$10,400 ) Terminal Loss on Furniture ( 1,120) Mr. Taylor’s Rental Income before CCA: Rent \$28,400 Expenses (18,180) Terminal Loss on Furniture ( 1,120 ) Rental Income Before CCA \$ 9,100 On the Building : UCC Balance on Building
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## This note was uploaded on 02/18/2011 for the course ECON 101 taught by Professor Professor during the Spring '11 term at American University of Antigua.

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Homework Problems 5-2, 5-4 - Solution to Problem 5-2 Part A...

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