Taxation-1 Capital Cost Allowances

Assignment Problem Five - 8 (CCA And CEC Transition Calculations) Microhard Ltd. has a December 31 year end. As of January 1, 2020, Microhard had the following UCC balances for its various tangible assets:

Class 1 $606,929 Class 8 347,291 Class 10 142,800 Class 13 175,500

Other information related to the companys tangible assets is as follows:

Class 1 The January 1, 2020, balance in Class 1 reflected a single building that was acquired in 2016 for $900,000. Of this total, $200,000 was allocated to the land on which the building was situated. On February 1, 2020, this building and the land was sold for $800,000. At this time, the value of the land was unchanged at $200,000. A new building was purchased on November 15, 2020, at a cost of $950,000, with $150,000 of this total being allocated to the land on which the building was situated. The new building is used 50 percent for manufacturing and processing and 50 percent for office space. It is allocated to a separate Class 1.

Class 8 On March 1, 2020, the company acquired Class 8 assets for $111,256. As a result of trading in older Class 8 assets, the company received a trade in allowance of $20,000, resulting in a net cost for the new assets of $91,256. The capital cost of the assets traded in was $58,425.

Class 10 The January 1, 2020, balance in Class 10 reflects eight vehicles that were being used by the companys sales staff. Their original cost totaled $240,000. The company decided it would be more economical to provide their sales staff with leased vehicles. To this end, the eight vehicles were sold for proceeds of $150,000 on October 31, 2020. The amount received for each vehicle was less than its capital cost. On August 1, 2020, the company acquires a BMW 750 for the use of the companys president. The cost of this vehicle was $142,000. The president drives it 65,000 kilometres during the 2020 fiscal year, with only 10,000 kilometres involving employment duties. The president is not a shareholder of Microhard.

Class 13 Some of the companys business is conducted out of a building that is leased. The lease, which had an initial term of six years, can be renewed for two additional years at the end of the initial term. Immediately after the lease was signed on January 1, 2018, Microhard spent $216,000 on leasehold improvements. During April 2020, an additional $42,000 was spent upgrading this property. It is the policy of the company to deduct maximum CCA in each year.

Required: Calculate the maximum CCA for the year ending December 31, 2020. Your answer should include the maximum that can be deducted for each CCA class. In addition, indicate the amount of any recapture, terminal loss, or taxable capital gain that results from dispositions during 2020.