Question

A company has a January 1, 2020 balance for CCA class 53 of $150,000.

During 2020, the company acquired additional Class 53 assets for a total cost of $2,200,000.

Also, one of the several Class 53 assets was sold during the year for proceeds of $50,000. It had a cost of $200,000.

Which of the following answers corresponds to the maximum CCA allowed for the company's Class 53 for the year 2020?

$1,687,500
		$1,700,000
		None of the choices shown.
		$2,275,000
		$612,500
		$2,250,000
		$2,225,000
		$2,165,000

Answer 1

Capital Cost Allowance on Class 53 Assets has 50% (subject to half year rule) on reducing balance method:

So, On Opening balance of Class 53 Assets, CCA will be charrged 50% after deducting any sale of machinery i.e. $(150,000 - 50,000) X 50% = $50,000

And Assets purchased during the year of Class 53, CCA will be charged 25% as per half year rule i.e. $2,200,000 X 25% = $550,000

Now, CCA on Class 53 assets for year 2020 is $(50,000 + 550,000) = $600,000

Balance at the end of the year 2020 will be $(150,000 - 50,000 + 2,200,000 - 600,000) = $1,700,000.00