Your client, 123 Limited is a manufacturer. They had the following balances for capital assets as of
Question:
Your client, 123 Limited is a manufacturer. They had the following balances for capital assets as of January 1, 2021.
| Type | Straight line | Book value | Class | UCC |
| Equipment | 5 years | $175,000 | 8 | $45,000 |
| Trucks | 3 years | $405,000 | 10 | $275,000 |
| Building | 40 years | $1,011,000 | 1 | $613,000 |
| Land | N/A | $55,000 | N/A | N/A |
| Leasehold improvements | Lease life | $113,000 | 13 | $165,000 |
| Intangible | indefinite | $0 | 14.1 | $0 |
Class 13 has the following details:
- Leasehold improvements to the warehouse which is leased and cost $150,000 in the year 2020. The remaining length of the lease in 2020 was seven years. There are two successive options in the lease, both for three years.
- Leasehold improvements to a leased office space which cost $81,600 in 2019. The remaining length of the lease was five years (at that time) with an option to renew for a period of an additional year.
The following items were additions in 2021:
A new concrete manufacturing building in July | Land $428,000 Building $1,970,000 |
Paved parking lot for new building | $105,000 |
Additional renovations to the leased office space | $44,000 |
Manufacturing equipment | $85,000 |
Office equipment | $99,000 |
Legal fees paid to reorganize the capital structure | $44,000 |
The following items were disposed of in 2021:
| Cost | Book value | Proceeds | |
| Office equipment | $21,000 | $4,800 | $2,250 |
| A building (brick) in class 1 (not including land) | $1,560,000 | $1,011,000 | $575,000 |
Required: Prepare the CCA schedule for the items above. Assume the maximum write-off for tax purposes (for CCA). For the disposals, ensure you calculate whether there is any terminal loss or recapture and the capital gain or capital loss.
Use the following chart to help organize your response. See next page...
Item #1 Class #/rate | Item #2 | Item #3 | |
| January 1, 2021 | |||
| Opening UCC | |||
| Additions | |||
| Disposals | |||
| Ending UCC | |||
| Impact of AII | |||
| Adjusted UCC | |||
| CCA - for 2021 | |||
| Ending UCC | |||
Expert Answer:
Item 1 ClassRate 820 January 1 2021 Opening UCC 45000 Additions 85000 Disposals 21000 Ending UCC 109000 Impact of AII 0 Adjusted UCC 109000 CCA for 20... View the full answer
