Reference no: EM132765923
Question: 1) The following information relates to the ABC's depreciable assets.Class 1Class 3Class 8 - Class 10 Class 10.1
- During 2020, a new office building was acquired at a total cost of $623,000. Of this total, it is estimated that the value of the land is $145,000. The building will be used 100 percent for non-residential activities, none of which involve manufacturing. It will be allocated to a separate Class 1.
- The January 1, 2020 balance in this Class was $798,000. During 2020, one of the warehouses in this Class burned to the ground. It had a capital cost of $150,000. Insurance proceeds totaled $185,000.
The January 1, 2020 balance in this Class was $346,000. During 2020, the Company acquired Class 8 assets at a cost of $105,000. Class 8 assets with a capital cost of $83,000 were sold for proceeds of $75,000. None of the individual assets sold had proceeds that exceeded their individual capital cost.
- The January 1, 2020 balance in this Class was $150,000. During 2020, 3 passenger vehicles were acquired at a cost of $25,000 each. In addition, a delivery van with a capital cost of $42,000 was sold for $18,000.
The January 1, 2020 balance in this Class was $17,850. The only asset in this Class was the CEO's $350,000 Bentley. At the instructions of the Company's directors, who felt this vehicle was excessively extravagant, the car was sold for $275,000 during 2020.
Class 13 - The January 1, 2020 balance in this Class was $42,500, reflecting improvements that were made in 2018, the year in which the lease commenced. These improvements were made on a property leased as office space for the Company's executives. The basic lease term is for 8 years, with an option to renew for a period of 2 years. Additional improvements, costing $40,000, were made during 2020.
Class 50 - The January 1, 2020 balance in this Class was $23,000. During 2020, there were additions to this Class with a capital cost of $18,000.
Class 53 - The January 1, 2020 balance in this Class was $63,000. The capital cost of the assets in this Class was $84,000. As the Company has found its manufacturing operations to be unprofitable, all of these assets were sold during 2020. The proceeds totaled $51,000. None of the individual assets sold had proceeds that exceeded their individual capital cost.
ABC always takes maximum CCA on each Class of depreciable assets.
Required: Calculate the maximum CCA that can be taken by ABC on each class of assets for the year ending December 31, 2020 and calculate the UCC for each class of assets on January 1, 2021. In addition, determine the amount of any capital gain, recapture, or terminal loss that arises. Ignore GST/HST/PST considerations.