Reference no: EM133044347
Question - Creator Ltd. has a December 31 year-end. As of January 1, 2020, Creator Ltd. had the following UCC balances for its various tangible assets:
Class 8 220,000
Class 10 120,000
Other information relating to Creator Ltd.'s tangible assets is as follows:
The January 1, 2020 UCC balance in Class 01 reflected a single building that was acquired in 2016 for $940,000. Of that total, $240,000 was allocated to the land on which the building was situated. It was a new building used 50% for manufacturing and processing and 50% for office space. It was allocated to a separate Class 01. On November 13, 2020, the building and land were sold for $1,100,000. At the time of sale, the land was valued at $560,000.
A new building was purchased on December 13, 2020 at a cost of $880,000, with an amount of $140,000 of that total being allocated to the land on which the building was situated. The new building is used 50% for manufacturing and processing and 50% for office space. It is allocated to a separate Class 01.
On March 04, 2020, Creator Ltd. acquired office furniture for $90,000. As a result of trading in furniture, Creator Ltd. received a trade in allowance of $40,000, resulting in a net cost for the new furniture of $50,000. The capital cost of the furniture that was traded in was $55,000.
The January 1, 2020 balance in Class 10 reflects nine vehicles that were being used by Creator Ltd.'s sales staff. Their original cost totaled $380,000. Creator Ltd. decided it would be more economical to provide their sales staff with leased vehicles. To this end, the nine vehicles were sold for proceeds of $140,000 on September 09, 2020. The amount received for each vehicle was less than its capital cost.
On April 10, 2020, Creator Ltd. acquired a Mercedes, which was used solely by the company's president. The cost of this vehicle was $290,000. The president drove it in 2020: 70,000 kilometres driven, of which only 10,000 kilometres involved employment duties. The president is not a shareholder of Creator Ltd.
Some of Creator Ltd.'s business is conducted out of a building that is leased. The lease, which had an initial term of 6 years, can be renewed for 2 additional years at the end of the initial term. Immediately after the lease was signed on January 1, 2018, Creator Ltd. spent $280,000 on leasehold improvements. During July 2020, an additional $240,000 was spent upgrading this property.
During 2016, Creator Ltd. purchased a franchise. The franchise was purchased on August 1, 2016, cost $62,000, and had a legally limited life of 8 years.
Creator Ltd. took maximum CCA deductions in all years.
Required - Calculate Creator Ltd.'s maximum CCA for the year ending December 31, 2020. Your answer should include the maximum that can be deducted for each CCA class. In addition, indicate the amount of any recapture, terminal loss, or taxable capital gain that results from the 2020 dispositions.