Question

hi i'm confused--how to calculate CCA and UCC of a vehicle if there's salvage value?

let's say that the vehicle costs $28000 before tax; it has a salvage value of $10000

then how to calculate CCA and UCC of the each of the following three year (assuming that the vehicle was bought in the first year, and will be disposed in three years?)

and what about in five years?

please provide detailed explains, thank you very much.

Answer 1

Sol: calculation of cca and ucc are as follows:

Year	CCA	UCC
1	28,000 ×15% = 4,200	23,800
2	23,800 × 30% = 7,140	16,660
3	16,660 × 30% = 4998	11,662

The cca rate for vehicle is 30%.For the first year the cca rate is taken for a half year.

Value of the vehicle at the end of the 3rd year = $11,662

Less : Salvage value = ($ 10,000)

Recapture value = $ 1,662

Recapture value should be included in income because the business is recapturing the depreciation cost it had taken earlier.

Calculation of CCA and UCC for 5 years are as follows:

Year	CCA	UCC
3	11,662 × 30% = 3,499	8,163
4	8,163 × 30% = 2,449	5,714
5	5714 × 30% = 1,714	4,000

Value of the vehicle at the end of 5th year = $4,000

Less : Salvage value =($10,000)

Terminal Loss = ($6,000)

Terminal loss should be deducted from income.