SSS Problem 5-1 NOTE TO STUDENTS We would remind you that prior to November 21, 2018, the half-year rule applies to net additions. The Accll provisions only apply to purchases of depreciable property made from November 21, 2018 to December 31, 2027. Of course there are always a number of exceptions to both the half year rule and the Accll. (CCA Calculations Over 4 Years) Barbara's Messenger Service commenced business on November 1, 2018. It carries on an intra-city service business that guarantees delivery of important documents within three hours. The business is carried on by Barbara Good as a sole proprietorship. The business will have a fiscal pediod that ends on December 31. Barbara indicates that she plans to take maximum CCA in each year. On November 15, 2018, 10 small cars are purchased to be used for deliveries. These cars have a capital cost of $18,000 each. In 2019 five additional cars are purchased at a cost of $22,000 each. In addition, four of the original cars are sold for proceeds of $5,000 each. In 2020 eight additional cars are purchased at a cost of $25,000 each. The remaining six cars that were purchased in 2018 are sold for $2,000 each. Barbara has found that when particularly important, high value packages are involved, some of her clients require the package to be hand delivered in an awe-inspiring style. These clients are willing to pay a hefty surcharge for this service. In order to accommodate this, the business acquires two S Class Mercedes at a cost of $160,000 each in 2020. Early in 2021, Barbara receives a proposal of marriage from her wealthiest client. Barbara accepts this proposal and, because she will be moving to a different city, she decides to terminate her business on March 31, 2021. The 13 remaining small cars are sold for $6,000 each. The S Class Mercedes are sold for $95,000 each. Required: For each of the years 2018 through 2021, calculate the maximum available CCA. In addition, determine the amount of any capital gain, recapture, or terminal loss that occurs in any of the 2018 to 2021 years. Ignore GST/HST & PST considerations. SSS Problem 5-1 NOTE TO STUDENTS We would remind you that prior to November 21, 2018, the half-year rule applies to net additions. The Accll provisions only apply to purchases of depreciable property made from November 21, 2018 to December 31, 2027. Of course there are always a number of exceptions to both the half year rule and the Accll. (CCA Calculations Over 4 Years) Barbara's Messenger Service commenced business on November 1, 2018. It carries on an intra-city service business that guarantees delivery of important documents within three hours. The business is carried on by Barbara Good as a sole proprietorship. The business will have a fiscal pediod that ends on December 31. Barbara indicates that she plans to take maximum CCA in each year. On November 15, 2018, 10 small cars are purchased to be used for deliveries. These cars have a capital cost of $18,000 each. In 2019 five additional cars are purchased at a cost of $22,000 each. In addition, four of the original cars are sold for proceeds of $5,000 each. In 2020 eight additional cars are purchased at a cost of $25,000 each. The remaining six cars that were purchased in 2018 are sold for $2,000 each. Barbara has found that when particularly important, high value packages are involved, some of her clients require the package to be hand delivered in an awe-inspiring style. These clients are willing to pay a hefty surcharge for this service. In order to accommodate this, the business acquires two S Class Mercedes at a cost of $160,000 each in 2020. Early in 2021, Barbara receives a proposal of marriage from her wealthiest client. Barbara accepts this proposal and, because she will be moving to a different city, she decides to terminate her business on March 31, 2021. The 13 remaining small cars are sold for $6,000 each. The S Class Mercedes are sold for $95,000 each. Required: For each of the years 2018 through 2021, calculate the maximum available CCA. In addition, determine the amount of any capital gain, recapture, or terminal loss that occurs in any of the 2018 to 2021 years. Ignore GST/HST & PST considerations
