In October 2003, JJ Ltd., purchased an asset for $50,000. The asset was sold in

January 2005 for $30,000. A replacement asset was purchased for $56,000 and it

is now the only asset in the class.

In 2007, the company sold the new asset in July for $34,000. The asset was not

replaced and the asset class was closed.

Assume that the firm has a December 31 year end, the applicable tax rate is 40%

and the CCA rate is 20%.

Required:

(a) Calculate CCA claimed in each year from 2003 through 2007.

(b) For 2007, also calculate the

(i) recapture depreciation, terminal loss, capital gains if any, that result from

the sale of the asset, and

(ii) the related tax effect on taxes payable