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.
Base UCC = 30 000
CCA = 30 000 * 0.5 (half year rule) * 30% = 4500
Remaining UCC = 30 000 - 4500 = 25 500
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.
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
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
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.
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
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
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
when purchases are made.
> 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?
1: 51000 : .85p