Pools Done Fine (PDF) in 2018 purchased two class 8 assets which have a CCA rate of 20% for the total amount of $50,000 Item 1 was purchased for $24,000 and Item 2 purchased for $26,000. At the end of 2019 the combined UCC of these two class 8 assets was $36,000. In early 2020 Item 1 was sold for $10,000 and item 2 was sold for $16,000. No other class 8 assets remained. 

Required:  

Part A: Based on the above information, calculate the effect of this sale. 

Part B: Assume now that PDF purchased another class 8 asset on clearance for $1,200 at the local hardware store on December 29 th of 2020. 

Calculate the effect of this purchase on Part A  and provide any advice that you feel PDF would benefit from.

Answer rating: 100% (QA)

Part A To calculate the effect of the sale of the class 8 assets on the UCC undepreciated capital cost and CCA capital cost allowance pool of Pools Do... View the full answer