EARTH Incbegan Operating Ten Years Ago and Has Always Claimed the the Maximum

question 7

Essay

EARTH Inc.began operating ten years ago and has always claimed the maximum CCA.The company has a December 31st year-end.
The following information is known about EARTH's capital assets in 2020.
The undepreciated capital cost in Class 8 was $10,000 at the end of 2019.None of the assets in the class were purchased in 2019.
In 2020, EARTH expanded into the manufacturing of recycling bins and purchased a Class 53 asset for $50,000.
The undepreciated capital cost in Class 10 was $12,000 at the end of 2018.Due to the company's growth, EARTH sold the only asset in the pool (a small pickup truck) on December 20th of 2019 for $5,000.On the same day, EARTH spent $8,000 on a slightly larger used truck to use temporarily until an appropriate work truck could be found in the upcoming year.The company did not conduct any business activities between December 20th, 2019 and January 2nd, 2020.
Required:
A) Calculate the net increase or decrease in EARTH's net income for tax purposes for 2020 if the maximum CCA is claimed.
B) Based strictly on the information provided, what tax advice would have been beneficial for EARTH in 2019 in order to minimize the company's net income for tax purposes?

• A) Calculate the net increase or decrease in EARTH's net income for tax purposes for 2020 if the maximum CCA is claimed.
• B) Based strictly on the information provided, what tax advice would have been beneficial for EARTH in 2019 in order to minimize the company's net income for tax purposes?

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Definitions:

Types of Losses

Various categories of detriment or disadvantage experienced, such as financial, operational, or reputational loss.

Nature of Activity

A descriptor of the fundamental actions, purpose, or operations of an individual, organization, or process.

Special Training

Tailored education or instruction provided to individuals or groups to improve specific skills or knowledge for particular purposes.

Insurance Policy

A contract between an individual or entity and an insurance company specifying the terms for the coverage provided against specific risks.