When an asset class is terminated, there will be recaptured depreciation when the adjusted cost of disposal from UCC of the asset class is a negative balance.

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When an asset class is terminated and the adjusted cost of disposal from UCC of the asset class is negative, recaptured depreciation will occur. This is because the depreciation claimed on the assets in the class has exceeded the total cost of the assets, resulting in a negative balance. Recaptured depreciation is the amount of previously claimed depreciation that must be added back to taxable income when an asset is disposed of or the asset class is terminated.

When an Asset Class Is Terminated, There Will Be Recaptured