Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vinny Crafters is an unincorporated business which provides courier services within the city of Sudbury. It has a taxation year that ends on December 31

Vinny Crafters is an unincorporated business which provides courier services within the city of Sudbury. It has a taxation year that ends on December 31 and plans to deduct the maximum CCA each year. Vinny Crafters began operating on May 1, 2018 by acquiring a new building at a total cost of $326,000. Of this total, $53,000 is allocated to the land on which the building is situated. As it will be used 100 percent for non-residential purposes other than manufacturing, it is allocated to a separate Class 1. Furnishings for the building are acquired on December 1, 2018 at a cost of $85,000. Desktop computers to coordinate operations were acquired on December 1, 2018 at a cost of $6,000. Also on December 1, 2018, the business acquires 12 vehicles to be used by its couriers. The cost of these vehicles is $23,000 each for a total of $276,000. During 2019, the business trades in 5 of its old vehicles for more fuel efficient vehicles. The replacement vehicles cost $27,000 per vehicle. The company receives a trade-in allowance of $16,000 for each old vehicle. Also during 2019, the Company acquires a luxury vehicle to be used by Vinny, the owner of the business. The cost of this vehicle is $103,000. During 2020, Vinny and five of his drivers are charged with smuggling counterfeit goods. Vinny Crafters is closed down on December 31, 2020 and, before closing, Vinny sells the assets as follows: The building is sold for $342,000, with $53,000 of this amount being attributed to the land. The remaining 7 vehicles that were purchased in 2018 are sold for $73,000. The 5 vehicles that were acquired in 2019 are sold for $62,500. The amount received for each vehicle was less than its capital cost. The furniture is sold for $12,300. The computers are sold for $1,500. The luxury vehicle is sold for $63,800. Required: Determine the maximum CCA that can be taken in each of the years 2018 through 2020. In your calculations, include and identify the UCC balances for January 1, 2019, January 1, 2020, and January 1, 2021. In addition, indicate any tax effects resulting from the 2019 and 2020 dispositions. Ignore GST/HST/PST considerations.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Principles And Practice Of Auditing

Authors: George Puttick, Sandra Van Esch

8th Edition

0702156914, 978-0702156915

More Books

Students also viewed these Accounting questions