# Quick UCC Question

• Mar 29th 2010, 01:48 PM
BlackBlaze
Quick UCC Question
Say I bought something in year 1 for \$30 000 and then in year 3, I buy something else for \$20 000, with a CCA rate of 30% for all items. What would the base and remaining undepreciated captial cost be for year 4?

So, first, to get to year 3, I need to apply the CCA rate for two years on the first item.
Year 1:
Base UCC = 30 000
CCA = 30 000 * 0.5 (half year rule) * 30% = 4500
Remaining UCC = 30 000 - 4500 = 25 500
Year 2:
Base UCC = 25 500 (from previous year)
CCA = 25 500 * 30% = 7650
Remaining UCC = 25 500 - 7650 = 17 850

Now, this where I start to feel less confident.
Year 3:
Base UCC would be previous year's remaining UCC plus the price of the second item? So that would be 17 850 + 20 000 = 37 850
But then the CCA has the half-year rule on one thing and not on the other. Separate calculation for each item?
17 850 * 30% + 20 000 * 0.5 * 30% = 8355
Remaining UCC = 37 850 - 8355 = 29 495

And then year 4 I can just take the remaining UCC from year 3 and apply CCA as if there were only one thing.

Is my understanding of the calculations in year 3 correct?
• Mar 29th 2010, 07:27 PM
Wilmer
Keep each purchase SEPARATE (different ledgers);
like, when 2nd purchase made, keep it by itself;
add the 2 together to get "net"...
• Mar 29th 2010, 07:30 PM
BlackBlaze
This was how the question was presented, and it seems to strongly suggest keeping everything together...(numbers don't match with above, because I just wanted to see how an example would work out):

1 (10 marks). St. Jacob Construction Co. had purchased several equipment during the last few years. Its first asset was a tow truck purchased in 2003 for \$60,000. In 2005, it purchased a van for \$20,000. A second tow truck was bought in 2008 for \$50,000. What was the value of their UCC at the end of 2009, given a CCA rate of 30% for all the equipment? Construct a full table from 2003 till 2009 to derive the UCC value of 2009. You need to fill out all the cells in the table and explain the calculation step.

Year | Adjustment | Base UCC | CCA (30%) | Remaining UCC
2003 | 60,000
2004 | 0
2005 | 20,000
2006 | 0
2007 | 0
2008 | 50,000
2009 | 0
• Mar 29th 2010, 07:45 PM
Wilmer
Quote:

Originally Posted by BlackBlaze
This was how the question was presented, and it seems to strongly suggest keeping everything together...

You're missing my point.
Keep a separate account/ledger for each, in order to do the calculations
applicable to each (hide the darn things if you wish!).
Then combine them in order to "keep everything together"...
• Mar 29th 2010, 07:51 PM
BlackBlaze
The net results end up the same, regardless of whether or not I keep the calculations for each item apart from another. Is this merely to keep things orderly and logical?

In other words, does that mean my original logic is not flawed?
• Mar 31st 2010, 02:33 AM
Wilmer
Quote:

Originally Posted by BlackBlaze
>The net results end up the same, regardless of whether or not I keep the calculations
> for each item apart from another. Is this merely to keep things orderly and logical?

YES. To make the calculations less confusing, particularly in years

> In other words, does that mean my original logic is not flawed?

YES. You were correct. There's only one way to deduct 15% in year
of purchase, then 30% in subsequent years!

You can get residuals at any year-end by formula;
example: \$60,000 purchase; residual end of year 6?
[p=60000, y=6]
1: 51000 : .85p
2: 35700
...
6: 8572

Formula: .85p[.7^(y-1)]
.85(60000)(.7^5) = ~8572