Angela Smith Has Owned and Operated the Stationary Store for Fifteen

question 3

Essay

Angela Smith has owned and operated The Stationary Store for fifteen years.The company's year-end is December 31^st.Angela is trying to calculate the amount of capital cost allowance that she can deduct in 20x0 and has asked for your assistance.She has provided you with the following information:
Assets owned prior to 20x0 and their UCC balances on January 1,20x0 are listed below:
Additional information for 20x0:
Angela purchased $2,000 worth of small tools (each costing under $500).
She sold her delivery van for $12,000 (the original cost was $20,000),and she purchased a second-hand van for $16,000.
She installed a $15,000 air conditioning system in her building and added the cost to the standard Class 1 pool.
In December of 20x0 she sold the photocopier for $1,500 and will replace it in January,20x1 with a second-hand model valued at $1,700.
Angela amortizes the patent in Class 44.
The business acquired a franchise on March 1^st of 20x0 costing $55,000.The franchise has a limited legal life of 20 years.(Ignore leap year effects.)
Required:
A)Calculate the following:
1)the total CCA that Angela will be able to claim in 20x0;
2)the UCC balances as of December 31,20x0;
3)any recapture and/or terminal loss that occurred during the year.
B)What would the tax effect have been for the original photocopier if Angela had purchased the new photocopier during 20x0?

• A)Calculate the following: 1)the total CCA that Angela will be able to claim in 20x0; 2)the UCC balances as of December 31,20x0; 3)any recapture and/or terminal loss that occurred during the year.
• B)What would the tax effect have been for the original photocopier if Angela had purchased the new photocopier during 20x0?

Recognize the relationship between input productivity and output.

Understand the concept of derived demand for inputs.

Comprehend how market wage rates affect labor demand.

Analyze the relationship between market demand for events and pricing under fixed supply conditions.

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Definitions:

Average Rate of Return

A monetary measurement for assessing an investment's profit efficiency, determined by dividing the yearly average profit by the cost of initial investment.

Cash Payback

A capital budgeting method that estimates the time required for an investment to generate cash flows sufficient to recover its initial cost.

Internal Rate of Return

A financial metric used in capital budgeting to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Present Value Factor

A multiplier used to calculate the present value of a future amount of money or stream of payments.