Riverbed Corp. purchased Machine no. 201 on May 1, 2020. The following information relating to Machine no. 201 was gathered at the end of May: | Price | | $95,000 | | Credit terms | | 2/10, n/30 | | Freight-in costs | | $900 | | Preparation and installation costs | | $4,100 | | Labour costs during regular production operations | | $11,500 | It was expected that the machine could be used for 10 years, after which the residual value would be zero. However, Riverbed intends to use the machine for only eight years and expects to then be able to sell it for $1,500. The invoice for Machine no. 201 was paid on May 5, 2020. Riverbed has a December 31 year end. Depreciation expense should be calculated to the nearest half month. Riverbed follows IFRS for financial statement purposes. | | | | | | Calculate the depreciation expense for the years indicated using the following methods. (Do not round intermediate calculations and round final answers to 0 decimal places, e.g. 5,275.) 1. Straight-line method for the fiscal years ended December 31, 2020 and 2021 2. Double-declining-balance method for the fiscal years ended December 31, 2020 and 2021 | | | 2020 | | 2021 | | 1. Straight-line | | $ | | $ | | 2. Double-declining balance | | $ | | $ | | | | | | | Calculate the capital cost allowance for the 2020 and 2021 tax returns, assuming a CCA class with a rate of 25%. (Round answers to 0 decimal places, e.g. 5,275.) | CCA for 2020 | | $ | | CCA for 2021 | | $ | How would the calculation change for 2020 and 2021 based on the new CCA rules implemented in late 2018 (see footnote 20) assuming this is "eligible property"? (Round answers to 0 decimal places, e.g. 5,275.) | CCA for 2020 | | $ | | CCA for 2021 | | $ | | | | | | | Assume that Riverbed selects the double-declining-balance method of depreciation. In 2022, demand for the product produced by the machine decreases sharply, due to the launch of a new and better competing product on the market. On August 15, 2022, the management of Riverbed meets and decides to discontinue manufacturing the product. On September 15, 2022, a formal plan to sell the machine is authorized. On this date, the machine meets all criteria for classification as held for sale, and the machines fair value less costs to sell is $70,500. Calculate the depreciation expense for 2022. (Do not round intermediate calculations and round answers to 0 decimal places, e.g. 5,275.) | Depreciation expense for 2022 | | $ | | | | | |
