Wally’s is a department store operating in the area. Its operations are carried on in a building which is owned by the company. The capital cost of the building to Wally’s in September 2012 was $400,000. The company has been taking capital cost allowance on the structure on the basis that it is a Class 1 (NRB) asset with a capital cost allowance rate of 6%. In May 2014, a fire virtually destroyed the building.

In August 2014, under an insurance policy with the Risk-Averters Insurance Company, Wally’s received $385,000 for the destruction of the building. In 2016, a new building was constructed for $465,000.

REQUIRED

Trace the effects of these events on the balance of the undepreciated capital cost accounts in the building account for the building from 2012 through to the beginning balance for 2017. As you trace the effects, indicate all deductions from and inclusions in income from the business for the years indicated. Assume that the appropriate election is made.