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Compute Ltd. has a December 31 year-end. As of January 1, 2020, Compute Ltd. had the following UCC balances for its various tangible assets
Compute Ltd. has a December 31 year-end. As of January 1, 2020, Compute Ltd. had the following UCC balances for its various tangible assets Class 01 Class 08 Class 10 $563,966 220,000 120,000 Other information relating to Compute Ltd's tangible assets is as follows: The January 1, 2020 UCC balance in Class 01 reflected a single building that was acquired in 2016 for $940,000. Of that total, $240,000 was allocated to the land on which the building was situated. It was a new building used 50% for manufacturing and processing and 50% for office space. It was allocated to a separate Class 01.0n November 13, 2020, the building and land were sold for $1,100,000. At the time of sale, the land was valued at $560,000. A new building was purchased on December 13, 2020 at a cost of $880,000, with an amount of $140,000 of that total being allocated to the land on which the building was situated. The new building is used 50% for manufacturing and processing and 50% for office space. It is allocated to a separate Class 01. On March 04, 2020, Compute Ltd. acquired office furniture for $90,000. As a result of trading in furniture, Compute Ltd. received a trade in allowance of $40,000, resulting in a net cost for the new furniture of $50,000. The capital cost of the furniture that was traded in was $55,000. The January 1, 2020 balance in Class 10 reflects nine vehicles that were being used by Compute Ltd.'s sales staff. Their original cost totaled $380,000, Compute Ltd. decided it would be more economical to provide their sales staff with leased vehicles. To this end, the nine vehicles were sold for proceeds of $140,000 on September 09, 2020. The amount received for each vehicle was less than its capital cost. On April 10, 2020, Compute Ltd. acquired a Mercedes, which was used solely by the company's president. The cost of this vehicle was $290,000. The president drove it in 2020: 70,000 kilometres driven, of which only 10,000 kilometres involved employment duties. The president is not a shareholder of Compute Ltd. Some of Compute Ltd.'s business is conducted out of a building that is leased. The lease, which had an initial term of 6 years, can be renewed for 2 additional years at the end of the initial term. Immediately after the lease was signed on January 1, 2018, Compute Ltd. spent $280,000 on leasehold improvements. During July, 2020, an additional $240,000 was spent upgrading this property. During 2016, Compute Ltd. purchased a franchise. The franchise was purchased on August 1, 2016, cost $62,000, and had a legally limited life of 8 years. Compute Ltd. took maximum CCA deductions in all years. Required: Calculate Compute Ltd.'s maximum CCA for the year ending December 31, 2020. Your answer should include the maximum that can be deducted for each CCA class. In addition, indicate the amount of any recapture, terminal loss, or taxable capital gain that results from the 2020 dispositions.
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To calculate Compute Ltds maximum Capital Cost Allowance CCA for the year ending December 31 2020 we need to consider the changes in the UCC Undepreci...Get Instant Access to Expert-Tailored Solutions
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