Chapter 19 Notes. Intermediate Accounting Ii
1. The capital cost of an asset includes a number of costs. Which of the following costs would not be considered part of the capital cost?
A. Legal fees incurred to acquire the asset. B. Duties paid on the asset. C. Fire and theft insurance paid on the asset. D. Non-refundable provincial sales taxes paid on the asset.
2. A business has $5,000 in Taxable Income before CCA in the current year. The management anticipates a high income for the subsequent year. The maximum CCA deductible for the year in Class 8 is $5,000 and the maximum CCA deductible for the year in Class 12 is $5,000. To minimize the subsequent year’s taxes, the business should:
A. Claim maximum CCA on Class 8 only. B. Claim maximum CCA on Class 12 only. C. Claim maximum CCA on Class 8 and Class 12. D. Claim no CCA for the year.
3. Indicate which of the following could not be an eligible capital expenditure.
A. Cost of fines and penalties. B. Cost of government rights with an unlimited life. C. Appraisal costs associated with capital costs. D. Costs of incorporating a new company.
4. ABC Enterprises began operations on September 1 of the current year. It has chosen December 31 as its year end. On October 1 of the current year, the proprietorship purchased furniture and fixtures for $40,000. The maximum capital cost allowance on the furniture and fixtures for the current year ending December 31 will be:
A. $1,088. B. $1,337. C. $4,000. D. $8,000.
5. Robert bought a rental property ten years ago for $320,000, with $80,000 of the purchase price allocated to the land. Over the ten years, he claimed CCA such that his UCC at the beginning of this year for the building was $196,000. Robert sold the property this year for $520,000, with $180,000 of the sale price allocated to the land. With respect to the building, which of the following statements is correct?
A. Robert has recapture of $44,000.
A. Legal fees incurred to acquire the asset. B. Duties paid on the asset. C. Fire and theft insurance paid on the asset. D. Non-refundable provincial sales taxes paid on the asset.
2. A business has $5,000 in Taxable Income before CCA in the current year. The management anticipates a high income for the subsequent year. The maximum CCA deductible for the year in Class 8 is $5,000 and the maximum CCA deductible for the year in Class 12 is $5,000. To minimize the subsequent year’s taxes, the business should:
A. Claim maximum CCA on Class 8 only. B. Claim maximum CCA on Class 12 only. C. Claim maximum CCA on Class 8 and Class 12. D. Claim no CCA for the year.
3. Indicate which of the following could not be an eligible capital expenditure.
A. Cost of fines and penalties. B. Cost of government rights with an unlimited life. C. Appraisal costs associated with capital costs. D. Costs of incorporating a new company.
4. ABC Enterprises began operations on September 1 of the current year. It has chosen December 31 as its year end. On October 1 of the current year, the proprietorship purchased furniture and fixtures for $40,000. The maximum capital cost allowance on the furniture and fixtures for the current year ending December 31 will be:
A. $1,088. B. $1,337. C. $4,000. D. $8,000.
5. Robert bought a rental property ten years ago for $320,000, with $80,000 of the purchase price allocated to the land. Over the ten years, he claimed CCA such that his UCC at the beginning of this year for the building was $196,000. Robert sold the property this year for $520,000, with $180,000 of the sale price allocated to the land. With respect to the building, which of the following statements is correct?
A. Robert has recapture of $44,000.