Evergreen Trees Inc

question 1

Essay

Evergreen Trees Inc. is a CCPC operating in your province. The company has a
December 31st year-end.
Three asset sales occurred prior to the end of 20X1. The following information pertains to the net gain on the sale of the assets:
Building (One of several owned by the company)
The building was previously purchased for $80,000. At the time of the sale in 20X1, the accumulated amortization on the building was $10,000. The UCC
balance was $65,000. The full payment of $110,000 was received before the end of the year.
Land
The land was purchased for $200,000 and sold in 20X1 for $250,000. Proceeds of $60,000 will be received this year. The remainder of the payment will be
received in equal installments over the next eight years.
Marketable Securities
The company sold its entire public portfolio this year. The adjusted cost base of the shares was $100,000. The market value of the shares at the time of sale in 20X1 was $135,000. Selling costs on the sale were $5,000.
Required:
A) Calculate the minimum taxable capital gain that Evergreen Trees Inc. will have to report in 20X1.
B) Calculate the minimum taxable capital gain that must be reported in 20X2.

• A) Calculate the minimum taxable capital gain that Evergreen Trees Inc. will have to report in 20X1.
• B) Calculate the minimum taxable capital gain that must be reported in 20X2.

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