On January 1, 2021, Ltd. has the following UCC balances.
Class 8             162,900
Class 10           112,100
Class 12            41,800
Class 13            179,700
Class 14.1         131,790
For the taxation year ending December 31, 2021, Kingston Ltd. has determined that its Net Income, before any deduction for CCA, amounts to $42,900. As the company does not have any Division C deductions, Taxable Income, before any deduction for CCA, would also amount to $42,900.
Other information related to the company's depreciable property is as follows.
1.
All of the Class 12 property was purchased in 2020.
2.
The leasehold improvements were made in September 2019 at a capital loss of $239,600.
3.
During 2020,the capital cost of additions to Class 10 amount to $51,900, while the proceeds from dispositions in this class totaled $29,400.
In no case did the proceeds of the disposition exceed the capital cost of the properties sold, and there was still property in the class as of December 31, 2021.
4.
There were no 2021additions or dispositions to any of Classes 8, 12, 13, or 14.1.
5.
The company has always deducted the maximum amount of CCA.

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Requirement A. Calculate the maximum CCA claim by Kingston Ltd. for the taxation year ending December 31, 2021. (Round your answer to the nearest dollar.) The maximum CCA claim is S Requirement B. As Kingston's tax advisor, indicate how much CCA you would advise them to claim for the 2021 taxation year and the specific classes from which it should be claimed. Provide a brief explanation of the reason for your recommendation. In providing this advice, ignore the possibility that losses can be carried either back or forward. In other words the goal is simply to reduce taxable income, and therefore taxes payable, to nil. Explain the best way to make your recommendation. Choose the correct answer below. O A. Deduct the required amount from the balances with the lowest rates. OB. Deduct the required amount from the balances with the highest rates. C. Deduct the required amount from the largest balances first. O D. Deduct the required amount from the smallest balances first. Requirement A. Calculate the maximum CCA claim by Kingston Ltd. for the taxation year ending December 31, 2021. (Round your answer to the nearest dollar.) The maximum CCA claim is S Requirement B. As Kingston's tax advisor, indicate how much CCA you would advise them to claim for the 2021 taxation year and the specific classes from which it should be claimed. Provide a brief explanation of the reason for your recommendation. In providing this advice, ignore the possibility that losses can be carried either back or forward. In other words the goal is simply to reduce taxable income, and therefore taxes payable, to nil. Explain the best way to make your recommendation. Choose the correct answer below. O A. Deduct the required amount from the balances with the lowest rates. OB. Deduct the required amount from the balances with the highest rates. C. Deduct the required amount from the largest balances first. O D. Deduct the required amount from the smallest balances first.

Answer rating: 100% (QA)

To calculate the maximum Capital Cost Allowance CCA claim we need to know the CCA rates for each class of assets Based on the typical Canadian CCA classes here are the rates Class 8 20 Class 10 30 Cla... View the full answer