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,
- 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
Class 8 (Photocopier)
18,000
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.Thismachine 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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started