Question
Lou Silva has owned and operated The Wellness Store for fifteen years. The company's year-end is December 31st. The following chart lists the company's assets
Lou Silva has owned and operated The Wellness Store for fifteen years. The company's year-end is December 31st. The following chart lists the company's assets owned prior to 2021 and their UCC balances at the end of 2020.
Asset | UCC Balance |
Store (building purchased in 2005) | $100,000 |
Delivery van (Class 10) | 15,000 |
Furniture and office equipment (Class 8) | 30,000 |
Photocopier purchased in 2019 (Separate Class 8) | 2,000 |
Patent (purchased in 2018) | 10,000 |
The following transactions took place in 2021: a. Lou purchased $2,000 worth of small tools (each costing under $500). b. The delivery van was sold for $12,000. The original cost was $20,000. A second-hand van was purchased in the year for $16,000. c. $15,000 was paid for an air conditioning system in the building, which was added to the cost of the standard Class 1 pool. d. Lou sold the photocopier for $1,500 in the year, and will replace it in January 2022 with a second-hand model valued at $1,700. e. Lou amortizes the patent in Class 44. f. The business acquired a franchise on March 1st of 2021 for $55,000. The franchise has a limited legal life of 20 years. (Ignore leap year effects.) Required: A) Calculate the following: 1) the total CCA that Lou will be able to claim in 2021. 2) any recapture and/or terminal loss that occurred during the year. B) What would the tax effect have been for the original photocopier if Lou had purchased the new photocopier during 2021?
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