Question

CANADIAN TAXATION 2019 In the current year C purchased new office equipment costing $25,000. Later in the same year he sold some office equipment for $35,000 that originally cost $100,000. At the beginning of the current year the UCC of the office equipment class was $70,000. What is the maximum CCA deduction for the office equipment class that C can claim in the current year? Note: Do not place a minus sign in front of the amount.

Answer 1

Answer-  

Part-A

Computation of Max. CCA Deduction

A) CCA deduction for New office equiptment = Value of purchased X Half Value (50%) X Rate (Class 8)

= $ 25000 X 50% X 20 %

= $ 2500

B) CCA deduction for Existing office equipment =  

= Opening UCC- lower of Sale value or original cost X Rate

= $ 70000- 35000 ( lower of $ 35000 or $ 100000) X 20%

= $ 7000

Total (a+b) = $ 9500

Part B-

CCA deduction for N machinary equipment shall be under class 29. as 25 percent for first year , second year 50 % and third year 25 % on straight line method.

= 25 % of $ 105000 ( $ 10000+5 % of 100000)

= $ 26250