1. (8 marks)

Brigittes Bakery in Port-aux-Basques, Newfoundland, is considering expanding to a second location in Corner Brook. They would take out a lease on January 1, renewable every four years, in a vacant store. They would install $13,000 worth of equipment for selling and storing the baked goods: a cash register, display counter, refrigeration unit for pastries, and so on. If sales go as well as anticipated, after two years, they will spend $6,000 on capital improvements to the store and install an oven for $3,000 so that they can produce some goods locally rather than ship everything from Port-aux-Basques. Calculate the TOTAL beginning UCC, CCA depreciation, and ending UCC amounts for the first 8 years of the second location. Assume leasehold improvements have zero salvage value at that time.

Note the following: leasehold capital improvements fall under Class 13 and are depreciated using straight-line methods.

The equipment and oven fall into Class 8 and have a CCA rate of 20%.

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