Question

In the current​ year, Ms. Patel is provided with a vehicle leased by her​ employer, Everex Ltd. The vehicle originally cost​ $30,000 and was leased by Everex Ltd. in the prior​ year, on a​ 36-month lease term. Ms. Patel provides you with the following​ information: Days the vehicle was available for use by Ms. Patel in the current​ year: 250 Days the vehicle was leased by Everex Ltd. in the current​ year: 365 Fair market value of the vehicle in the current​ year: $14,500 Lease payments​ (including HST, excluding​ insurance): $820 per month Total kilometres driven in the current​ year: 29,000 Personal kilometres driven in the current​ year: 15,000 The minimum standby charge arising from the employer leased vehicle for Ms. Patel in the current year​ is:

A. ​$2,320\

B. ​$3,279

C. ​$4,373

D. ​$6,560

Please show workings?

Thank you!

Answer 1

As per law,  minimum standby charge are 2/3 of the lease cost(include taxes also) for peroid vehicle available

In the given case ,Vehicle was available for 250 days

Assuming 30 days a month, total of 8 Months vehicle is available(250/30)

Monthly Lease Cost = $820

So  minimum standby charge= 2/3*820*8

=$ 4,373 (round off)

Answer: C. ​$4,373