Acco340Sample Problems

# Class 1 class 10 class 101 class 8 2010 6 percent 30

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Class 1 Class 10 Class 10.1 Class 8

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2010 6 Percent 30 Percent 30 Percent 20 Percent Beginning UCC \$165,376 \$118,634 Nil \$35,507 Additions - Red convertible (Class Maximum ) Nil Nil \$30,000 Nil Dispositions - automobile - Lesser Of: Original Capital Cost = \$25,000 Proceeds = \$27,000 (See Note 3) Nil ( 25,000) Nil Nil One-Half Net Additions Nil Nil ( 15,000 ) Nil Balance \$165,376 \$ 93,634 \$15,000 \$35,507 Maximum CCA ( 9,923) ( 28,090) ( 4,500) ( 7,101) One-Half Net Additions Nil Nil 15,000 Nil January 1, 2011 UCC \$155,453 \$ 65,544 \$25,500 \$28,406 The total maximum CCA for 2010 would be \$49,614. Part B CCA impact regarding events that occurred in 2010 1. Theft Of Equipment This is, in effect, a disposition with nil proceeds . There will be no immediate tax effect as the equipment is not the last asset in the class. 2.Insurance Deductible The \$7,770 in insurance proceeds would be included in income [ITA 12(1)(f)], and the full repair expenses of \$8,270 would be a deductible expense . This results in the \$500 in repairs that were not covered under the Company’s insurance policy being deducted as a repair or maintenance charge. 3.Car Sale As the car was sold for \$2,000 more than its capital cost , there would be a capital gain of \$2,000, resulting in a taxable capital gain of \$1,000 [(1/2)(\$2,000)]. However, as there is still a positive balance in the class at the end of the year, no recapture would be recorded . 4. . Purchased computers not received before year end, therefore no ownership title, ie, not even the \$1,000 deposit is eligible for CCA 4. CCA, Recapture, And Terminal Losses Question On January 1, 2010, the beginning of its taxation year, Bard Ltd. has the following information on depreciable assets in its records: Undepreciated Original Type Of Asset Capital Cost Capital Cost Class 8 Furniture \$ 24,000 \$147,000 Class 1 Buildings (Acquired In 2005) 562,000 846,000 Class 10 Automobiles 220,000 315,000 During the 2010 taxation year, the following transactions occur: Sale Of Furniture -Furniture with an original cost of \$52,000 was sold for \$36,000.
Purchase And Sale Of Buildings A new building was acquired on February 1, 2010 at a cost of \$325,000 . Of this total, \$75,000 was the estimated value of the land on which the building was situated. The building will be used 100 percent for non-residential purposes and, in order to access the extra 2 percent CCA rate, it has been placed in a separate Class 1. Also during the year, a building with an original cost of \$335,000 was sold for \$352,000 . Of the \$352,000 received, \$200,000 is for the land on which the building is situated. The adjusted cost base of the land was equal to the \$200,000 proceeds of disposition. Sale Of Automobiles An extensive analysis of capital and operating costs indicated that the Company would be better off leasing automobiles, rather than continuing to purchase and retain ownership of these assets. As a consequence, all of the Company’s automobiles were sold on December 28, 2010 for \$185,000 . The leased vehicles were delivered on January 2, 2011 Sale Of Goodwill - In order to further streamline her operations, Bard Ltd sells off a portion of their operations to another individual. No depreciable or capital assets were disposed of. However, an amount of \$ 110,000 was received for the go odwill of this portion of the business.

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