Keep each purchase SEPARATE (different ledgers);
like, when 2nd purchase made, keep it by itself;
add the 2 together to get "net"...
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?
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