Mellisa Lewis purchased land in 1984 for $500,000. On 20 September 1995, at a cost of $1,000,000, she commenced building a factory where a 4% per year depreciation deduction is allowable. If the property was sold on 1 April 2020 for $2,000,000 how much capital gain should Mellisa declare in her 20 June 2020 tax return.

a)What indexation factor will you use to calculate the capital gain under the indexation method? (1 mark)

b)How much is the cost base under the indexation method? (1 mark)

c)What would be the capital gain under the indexation method? (1 mark)

d)How much is the cost base under the discount method? (1 mark)