Seminar.Week 12-April 18,2011 - FMGT 4410 Seminar Questions...

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FMGT 4410 –Seminar Questions Week12 Week of April 18, 2011 Question 1 In January of 2010, a CCPC sells its only non-depreciable capital asset for $250,000. The asset's ACB was $50,000 when it was acquired in 1970. It had a V-Day value of $100,000. How will this sale change each of the tax basis shareholders' equity accounts? How much will each account change? Ignore any income taxes payable as a result of this transaction. 1. POD $250,000 ACB $50,000 (1970) V-Day $100,000 1972: Pre-72 Cash 50,000 POD (V-Day) $100,000 ACB (50,000) CG $50,000 2010: Taxable Surplus POD $250,000 ACB (100,000) V-day CG 150,000 TCG 75,000 Question 2 A CCPC sells its only depreciable capital asset for $150,000 in 2010. The asset was purchased in 1995 and has an ACB of $200,000 and a UCC of $50,000. How will this sale change each of the tax basis shareholders' equity accounts? How much will each account change? Ignore any income taxes payable as a result of this transaction. Assume 20% corporate tax rate. 2. POD $150,000 ACB $200,000 UCC $50,000 POD $150,000 UCC ACB (200,000) 50,000 150,000 lesser of CC-200k and POD – 150k CL (50,000) 100,000 (recapture) No Capital Loss on Depreciable assets
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FMGT 4410 –Seminar Questions Week12
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