Purchase cost of the warehouse

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Reference no: EM1311761

Q. Valdez Corporation commenced operations on January 1, 1999. The company's financial performance during its first year of operation was as follows:

• Sales revenues, $1,500,000.

• Labor, material also overhead costs, $600,000.

• The company purchased a warehouse worth $500,000 in February. To finance this warehouse, the company mattered $500,000 of long-term bonds on January 1, which carry an interest rate of 10%. The first interest payment occurred on December 31.

• For depreciation purposes, the purchase cost of the warehouse is divided into $100,000 in land also $400,000 in building. The building is a CCA Class 1 asset also is depreciated accordingly.

• On January 5, the company purchased $200,000 of equipment, which falls into CCA Class 43.

• The corporate tax rate is 40%.

(a) Conclude the total CCA allowed in 1999.

(b) Conclude Valdez's income taxes for 1999.

Reference no: EM1311761

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