Angela Smith has owned and operated The Stationary Store for fifteen years.The company's year-end is December 31^st.Angela is trying to calculate the amount of capital cost allowance that she can deduct in 20x0 and has asked for your assistance.She has provided you with the following information:
Assets owned prior to 20x0 and their UCC balances on January 1,20x0 are listed below:
Additional information for 20x0:
Angela purchased $2,000 worth of small tools (each costing under $500).
She sold her delivery van for $12,000 (the original cost was $20,000),and she purchased a second-hand van for $16,000.
She installed a $15,000 air conditioning system in her building and added the cost to the standard Class 1 pool.
In December of 20x0 she sold the photocopier for $1,500 and will replace it in January,20x1 with a second-hand model valued at $1,700.
Angela amortizes the patent in Class 44.
The business acquired a franchise on March 1^st of 20x0 costing $55,000.The franchise has a limited legal life of 20 years.(Ignore leap year effects.)
Required:
A)Calculate the following:
1)the total CCA that Angela will be able to claim in 20x0;
2)the UCC balances as of December 31,20x0;
3)any recapture and/or terminal loss that occurred during the year.
B)What would the tax effect have been for the original photocopier if Angela had purchased the new photocopier during 20x0?

Question

Angela Smith has owned and operated The Stationary Store for fifteen years.The company's year-end is December 31^st.Angela is trying to calculate the amount of capital cost allowance that she can deduct in 20x0 and has asked for your assistance.She has provided you with the following information:
Assets owned prior to 20x0 and their UCC balances on January 1,20x0 are listed below:

Angela Smith has owned and operated The Stationary Store for fifteen years.The company's year-end is December 31<sup>st</sup>.Angela is trying to calculate the amount of capital cost allowance that she can deduct in 20x0 and has asked for your assistance.She has provided you with the following information: Assets owned prior to 20x0 and their UCC balances on January 1,20x0 are listed below: Additional information for 20x0: Angela purchased $2,000 worth of small tools (each costing under $500). She sold her delivery van for $12,000 (the original cost was $20,000),and she purchased a second-hand van for $16,000. She installed a $15,000 air conditioning system in her building and added the cost to the standard Class 1 pool. In December of 20x0 she sold the photocopier for $1,500 and will replace it in January,20x1 with a second-hand model valued at $1,700. Angela amortizes the patent in Class 44. The business acquired a franchise on March 1<sup>st</sup> of 20x0 costing $55,000.The franchise has a limited legal life of 20 years.(Ignore leap year effects.) Required: A)Calculate the following: 1)the total CCA that Angela will be able to claim in 20x0; 2)the UCC balances as of December 31,20x0; 3)any recapture and/or terminal loss that occurred during the year. B)What would the tax effect have been for the original photocopier if Angela had purchased the new photocopier during 20x0?

Additional information for 20x0:
Angela purchased $2,000 worth of small tools (each costing under $500).
She sold her delivery van for $12,000 (the original cost was $20,000),and she purchased a second-hand van for $16,000.
She installed a $15,000 air conditioning system in her building and added the cost to the standard Class 1 pool.
In December of 20x0 she sold the photocopier for $1,500 and will replace it in January,20x1 with a second-hand model valued at $1,700.
Angela amortizes the patent in Class 44.
The business acquired a franchise on March 1^st of 20x0 costing $55,000.The franchise has a limited legal life of 20 years.(Ignore leap year effects.)
Required:
A)Calculate the following:
1)the total CCA that Angela will be able to claim in 20x0;
2)the UCC balances as of December 31,20x0;
3)any recapture and/or terminal loss that occurred during the year.
B)What would the tax effect have been for the original photocopier if Angela had purchased the new photocopier during 20x0?

Quizplus · Accepted Answer

The Answer is A)

A) *(100,000 * .04)+ (15,000 * .04 * .5)= 4,300 **(15,000 * .3)+ [(16,000 - 12,000)* .3 * .5)= 5,100 ***$55,000 * 306/(365 * 20)= 2,305 B)The tax effect for the original copier would have been the same since photocopiers are afforded special treatment and may be placed in their own class provided they cost more than $1,000 (based on a specified time period).(The new copier would have recognized CCA of $170 if purchased in 20x0.)

*(100,000 * .04)+ (15,000 * .04 * .5)= 4,300
**(15,000 * .3)+ [(16,000 - 12,000)* .3 * .5)= 5,100
***$55,000 * 306/(365 * 20)= 2,305
B)The tax effect for the original copier would have been the same since photocopiers are afforded special treatment and may be placed in their own class provided they cost more than $1,000 (based on a specified time period).(The new copier would have recognized CCA of $170 if purchased in 20x0.)

Angela Smith Has Owned and Operated the Stationary Store for Fifteen