MULTI-PART Capital Cost Allowance (20 marks)

Allbrite Limited has a December 31, 2019 yearend. The Companys accountant has already added back accounting depreciation for NIFT calculation purposes, but has not recorded the items below. She wants you to calculate the Class 8 and Class 10 capital cost allowance and any other tax amounts that arise from the following facts:

1. The January 1, 2019 balance in Class 8 (20% rate) was $4,200,000. During 2019, there were additions to this class in the total amount of $700,000. In addition, Class 8 assets with a cost of $400,000 were sold for proceeds of $550,000. The net book value of these assets in the accounting records was $325,000, and the resulting gain of $225,000 was included in the accounting income for the year. There are numerous assets remaining in the class at the end of the 2019 taxation year.

2. At the beginning of 2019, the UCC in Class 10 (30% rate) was $800,000, reflecting the Companys fleet of cars. As the Company is changing to a policy of leasing its cars, all of these cars were sold during the year for $687,000. The capital cost of the cars was $1,200,000, and their net book value in the accounting records was equal to the sale proceeds of $687,000. Disregard whether any of these cars were worth more than $30,000. They all qualify for Class 10.

REQUIRED: Calculate the following:

A. Maximum capital cost allowance for class 8 and class 10 for 2019.

B. Opening UCC for class 8 and class 10 for January 1, 2020.

C. Any taxable capital gains or allowable capital losses,

D. Any terminal losses or recaptured capital cost allowance, and

E. Advise the Company accountant if there is any adjustment to NIFT, OTHER THAN the add back of book depreciation (which she has already done), that she should make based solely on facts 1 and 2 above.