Problem: Capital Cost Allowance at Elder

Elder Industries purchased new equipment for CAD $600,000$ plus taxes of CAD $60,000$

and CAD $40,000$ in transportation and installation expenses. The asset is in a CCA class

with a rate of $20\%$ which is subject to the half$-$year rule. Elder received a $10\%$

investment tax credit on the asset purchase. Other assets in this class were sold for CAD

$50,000.$ The class had a UCC of CAD $2,400,000$ at the beginning of the year.

What we need to understand

$1.$ First of all, what do CCA and UCC represent

$2.$ What is the total value of the acquisition $($and the role of the investment tax credit$)$

$3.$ What is the total value of the net acquisitions

$4.$ Using the half$-$year $($or accelerated$)$ rule

$5.$ Calculating the UCC at the beginning of the second year

REQUIRED:

$1.$ Determine the CCA deduction for the CCA class for the next two years.