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AFM 362 (14)
Lecture 15

AFM 362 Lecture 15: 5

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Accounting & Financial Management
AFM 362
Ken Klassen

CHAP 5 Land is NOT depreciable! K gains can occur only on nondepreciable property (land, stocks, bonds) Cant have capital LOSS on nondepreciable property. To calculate CCA: Beg UCC + Purchases for a company, dont include HST because they wont pay it remit to govt (Disposals) always lesser of costs or proceeds UCC Balance b4 adjustments (12 net) if purchase something ONLY: 0.5 * (purchase price dispose) UCC Balance before CCA (CCA rate) prorate it for number of days it has been, if UCC Balance before CCA is negative set equal to 0 (unless class 10.1 + net End UCC same as beginning UCC If you are given money from insurance to fix a capital asset, include that money in net income. Any unused portions are considered dispositions (less from UCC). When you sellget rid of an asset, consider: a) The capital gainloss If you dispose depreciable assets you never get a capital loss recaptureterminal loss Capital Gain = Proceeds > Cost, goes towards net income You can have a capital loss if you sell nondepreciable assets (stocksbonds) b) UCC LOCP = UCC balance before CCA If you have a negative UCC balance before CCA, you would recapture the amount (regardless of if there are or if there arent assets in the class). If you have a positive UCC balance before CCA and you have no assets left in the class, you would claim a terminal loss (bc not enough CCA has been claimed to decrease the value of the asset). If you still have assets left, CCA is claimed on the remaining UCC balance before CCA. 3 CASES at disposition Class 8 bunch of assets Opening UCC 100K + purch 0 dispose (LOCP) (60K) 12 net acq UCC b4 CCA 40K (positive balance in the class) 1. Assets left in the class just take CCA (20 of 40K= 8K) 2. No assets left in the class Terminal Loss! (cant have a UCC balance with no assets)
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