A private corporation sells a depreciable asset for $250,000. The asset had a capital cost of $200,000. The balance in its CCA Class was $1,200,000 and there were other assets in the Class. There will an addition to the capital dividend account of $50,000.

Question

Quizplus · Accepted Answer

The addition to the capital dividend account (CDA) would not be $50,000 because the CDA is affected by non-taxable portions of capital gains, not by the recapture of capital cost allowance (CCA) or the proceeds from the sale of depreciable assets. The $50,000 represents a capital gain, not a direct addition to the CDA.

A Private Corporation Sells a Depreciable Asset for $250,000