The Company has the following UCC balances on January $1$:

Class $1($A single building purchased in $2019)$ $$500,000$

Class $8150,000$

Class $1070,000$

Class $13127,500$

Class $1444,000$

$2.$ In the current year, the building was sold for $$650,000$ with $$125,000$ paid for the land and $$525,000$ paid for the building. The capital cost of the building was $$545,000$ and the cost and ACB of the land $$80,000.$

The building was subsequently replaced in the year with a new building at a cost of $$600,000$ for the building and $$200,000$ for the land.

The old building was used $100\%$ for business office space and an election had been made to include the building in a separate Class $1.$ The new replacement building is also used $100\%$ for business office space and is elected to be included in a separate Class $1.$

$3.$ In the year, the Company purchased office furnishings for $$47,000.$ Older furnishings with a capital cost of $$27,000$ were traded in for the new furnishings. The Company received a trade in allowance of $$7,000.$

$4.$ In the year the Company also purchased a Tesla $($zero$-$emission vehicle$)$ to be used by the president of the Company. The cost of the automobile was $$97,000.$ The president drives it $20,000$ kilometers during the year, of which only $5,000$ kilometers are for employment purposes and the remaining kilometers are for personal use. Any automobile benefit would be a taxable employee benefit.

$5.$ AC$1350$ conducts some of its business out of a building which it leases. The lease was signed in early $2022$ and had an initial lease term of $7$ years. There is also one renewal option for $3$ years. AC$1350$ spent $$150,000$ on leasehold improvements in $2022.$

$6.$ The Company purchased a limited life franchise for $$64,000$ January $1,2019.$ At the time of purchase the remaining legal life was exactly $8$ years.

$7.$ Company policy is to claim the maximum annual CCA.

Required: Calculate the maximum CCA, recapture, and terminal loss for each class of property for the year. Also include the ending UCC balances for each class for the year.

Answer rating: 100% (QA)

Lets go through each requirement step by step to calculate the maximum Capital Cost Allowance CCA recapture terminal loss and ending UCC balances for each class of property 1 Calculation of CCA Recapt... View the full answer