Question

You are provided with the following information related to Class 14.1​ (assume the opening UCC balance and all transactions relate to a period of time subsequent to January​ 1, 2017):

•Balance at beginning of the​ year: $58,000

•Purchased goodwill during the year for $12,000

•Sold various intangible properties included in Class 14.1 for $31,000 ​(assume original cost of disposed property is greater than proceeds of $31,000​)

What is the maximum CCA in the​ year?

Choose the correct answer.

A. $2,730

B. $1,950

C. $975

D.​$3,500

Answer 1

Opening balance	$58,000
Add: Purchases during the year	$12,000
Less: Dispositions during the year	$31,000
Closing balance	$39,000
× Rate of CCA	5%
CCA	$1,950

The correct answer is option B.

As it has been made clear in the question that the opening balance and related transactions are only of period subsequent to January 1,2017, the rate of CCA is taken as 5% in the place of old rate of 7%.

Also, since the proceeds of disposing is less than cost, there is no capital gain.