Q # 4 (10 Marks)

Tradesmen Auto purchased an asset in 2015 for $300,000. It was sold in 2017 for $330,000 and a replacement asset was purchased for $400,000.

In July 2019 the asset was sold for $260,000. The asset was not replaced and the asset class was closed.

Assume that the firm has been in business since 2010 and has a December 31 year end, the applicable tax rate is 35% and the CCA rate is 10%.

Required:

(a) Calculate CCA claimed in each year from 2015 through 2019.

(b) For 2019, also calculate the (i) recapture depreciation, terminal loss, capital gains if any, that result from the sale of the asset

(ii) AND Calculate the After Tax Cash Flow that results from the sale in 2019