The fiscal year of Chen Ltd., a Canadian public company, ends on December 31. On January 1, 2020, the UCC balances for the various classes of assets owned by the Company are as follows:
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Class Asset UCC @ January 1, 2020 Class 1 (4%) Building 290000 Class 8 Office furniture and equipment 70000 Class 8 (separate) Photocopier 20000 Class 10 Vehicles 120000 Class 10.1 Passenger vehicles over $30,000- None 0 Class 12 Tools (Under $500 each) Class 13 Leasehold improvements 52500 Class 14 Intangible assets with limited life-none 0 Class 50 Computer hardware 20000 Class 53 Manufacturing equipment 85000 6000 The following additions were made this year: 1. On September 15, 2020, a convertible is acquired at a cost of $60000 for use by the Vice President of the Company as a passenger vehicle. 2. Some new furniture was purchased at a cost of $14000. 3. On May 1, 2020, Chen Ltd. pays $140000 to enter a franchise agreement. The life of the franchise is 15 years. 4. On November 3, 2020, $171000 of class 53 manufacturing equipment was purchased. 5. On January 1, 2020, $40000 of leasehold improvements were made. 6. New computer hardware was purchased for $17000. The following disposals were made this year: 1. The photocopier in the separate class 8 was disposed of for $3000. It was originally purchased for $30,000. 2. Some old furniture was sold for proceeds of $7000. It was originally purchased for $11000. 3. Some computer hardware was sold for $7000. It was originally purchased on sale for $2500. 4. Some tools (from class 12) were sold for proceeds of $8000. The original cost of these tools was $12,000. Other notes & information: 1. The Company leases a building for $15,000 per year that houses a portion of its manufacturing operations. The lease was negotiated on January 1, 2015 and has an original term of 10 years. There are three renewal options on the lease. The term for each of these options is two years. The company made $84,000 of leasehold improvements immediately after signing the lease. No further improvements were made until the current year. 2. It is the policy of the Company to deduct maximum CCA in all years. Required: Calculate the maximum 2020 CCA that can be taken on each class of assets, the January 1, 2021 UCC balance for each class, and any other 2020 inclusions or deductions resulting from the information provided in the problem Put all of your final answers in the answer summary (in yellow) and show all your work to get to these answers in the green space below. Answer summary-enter your final answers in here in the yellow boxes: 1 Class CCA Taken (enter as positive number) January 1, 2021 UCC 8 8 Separate 10 10.1 11,600.00 14,000.00 3400 36,000.00 27,000.00 278,400.00 63,000.00 13,600.00 84,000.00 33,000.00 12 0 0.001 13 14 50 53 7,250.00 9.333.33 14300 85,250.00 85,250.00 130,666.67 20,200.00 170,750.00 Effect on net summary: (Write zero beside any option where there is no effect. Enter deductions as a negative and income inclusions as a positive) -208,133.33 Formualized-taken from chart above Total CCA taken Terminal loss Recapture Taxable capital gain Allowable capital loss Total Net income increase (decrease) -208,133.33 Formualized (sum of above)
