Reference no: EM132904547
Question - Alpha Ltd. is a Canadian-controlled private corporation operating a small land-development business.
The opening UCC balances are as follows:
Undepreciated capital cost at December 31, 2019 (opening balance for 2020):
Class 8 $30,000
Class 10 120,000
Class 10.1 18,000
Class 8 (Photocopier) 8,000
During 2020, the following transactions took place:
Alpha sold the passenger vehicle for $25,000. The vehicles originally cost $50,000 and had a book value of $48,000 at the time of sale. A new vehicle was obtained under a lease arrangement.
Alpha leased an office premises under a three-year lease agreement that began December 1, 2020. At the time, Alpha spent $60,000 to improve the premises. The lease agreement gives Alpha the option to renew the lease for two three-year periods. As an incentive, the landlord offered Alpha $ 20,000 toward these renovations.
Alpha began manufacturing pre-fab homes on June 1, 2020. At that time, it acquired the following:
License: right to manufacture for 10 years $90,000
Manufacturing equipment 105,000
Trucks 60,000
During the year the company sold the photocopier for 6,000. This machine had originally cost $12,000. It replaced the copier with a leased copier.
REQUIRED - Calculate the CCA for 2020 and indicate any recapture, terminal losses or taxable capital gains that may need to be added to income.