Assignment Problem Five - 7

(CCA, Recapture, And Terminal Losses - Includes Taxable Capital Gain)

On January 1, 2020, the beginning of its taxation year, Bard Ltd. has the following information on depreciable assets in its records:

Type Of Asset

Undepreciated Capital Cost

Original Capital Cost

Class 8 Furniture

$ 24,000

$ 147,000

Class 1 Buildings (Acquired In 2005)

562,000

846,000

Class 10 Automobiles

220,000

315,000

During the 2020 taxation year, the following transactions occur:

Sale Of Furniture Furniture with an original cost of $52,000 was sold for $36,000. There are still assets in Class 8 at the end of the year.

Purchase And Sale Of Buildings A new building was acquired on February 1, 2020, at a cost of $325,000. Of this total, $75,000 was the estimated value of the land on which the building was situated. The building will be used 100 percent for office space and is placed in a separate Class 1.

Also during the year, a building (including the land) with an original cost of $335,000 was sold for $352,000. Of the $352,000 received, $200,000 is for the land on which the building is situated. The adjusted cost base of the land was equal to the $200,000 proceeds of disposition.

Sale Of Automobiles An extensive analysis of capital and operating costs indicated that the company would be better off leasing automobiles, rather than continuing to purchase and retain ownership of these assets. As a consequence, all of the company's automobiles were sold on December 28, 2020, for $185,000. The leased vehicles were delivered on January 2, 2021.

Required: For the taxation year ending December 31, 2020, calculate the maximum CCA that can be deducted by Bard Ltd. for each CCA class. In addition, calculate the January 1, 2021, UCC balance for each class. As part of your answer, you should indicate any other tax consequences that would result from the described transactions