Lesson 4 ACCO 340

Declining balance basis , claim CCA as it goes down. CCA= Capital cost allowance - Deprecation Capital Cost= Book Value Case 1) Addition Bump, then CCA Case 2) Addition and disposition (Net disposition) When we have a acquisition and a disposition, we bump the net. UCC/ OB ? ADD : Cost of asset acquisition $X Deduct: Disposition 1)Cost of asset sold $X 2)Amount of asset sold $X = X (Bump this)
Case 3) In this case we have a net disposition, we do not bump. Case 4) Only Opening balance, No bump, just CCA 10% O/B $1M CCA 100K UC/EB $900K
Recapture (Increase in Income): Means you claimed too much CCA overtime. Only occurs if the negative balance is present at the end of the year. Goes into income Can avoid recapture if you buy another asset. Terminal Loss (Increase in Loss): Means you did not claim enough CCA, because it's our last asset and no assets left in class at end of year, we can not depredate anymore, we can claim as terminal loss (Positive and no assets remaining)
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