Question

A fork lift was purchased for $100,000 and has a CCA rate of 10%. After 3...

A fork lift was purchased for $100,000 and has a CCA rate of 10%. After 3 years you sell this fork lift for $105,000. How much tax do you pay (or do you save?) Tax Rate = 40%

Business   Accounting   
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Answer #1

Book Value:

Year

Opening Bal

Dep

Closing Bal

1

$ 100,000.00

$   5,000.00

$ 95,000.00

2

$   95,000.00

$   9,500.00

$ 85,500.00

3

$   85,500.00

$   8,550.00

$ 76,950.00

Profit = Sale Value – Book Value

= $ 105000 - $ 76950

= $ 28050

Tax paid = Profit * tax Rate

= $ 28050 * 40%

= $ 11220

50% of Actual dep will be considered in Year 1.

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