Mr. Fox is the sole owner of ABC Enterprises. He has several assets he is using in his business for which he has been claiming a CCA deduction. Below are the details of the asset class balances at December 31, 2023:
Class 8: Furniture UCC Balance: $21,500 Original Cost: $30,000
Class 10: Automobiles UCC Balance: $34,800 Original Cost: $65,000
Class 1: Building UCC Balance: $112,000 Original Cost: $244,000
1. During 2024, Mr. Fox acquired additional furniture with a total cost of $15,450. As a result, he decided he would sell some of his old furniture to a friend who offered him $4,750. The original cost of the furniture sold to the friend is $10,000. Calculate the Class 8 CCA that Mr. Fox would be eligible to claim against his business income considering these transactions. The furniture does not qualify for AIIP or Immediate Expensing. In addition, calculate the ending UCC balance for 2024. Show all calculations for marks.
2. Explain why the original cost of the furniture of $10,000 is relevant information.
3. Also, during the 2024 year, Mr. Fox purchased two new automobiles for use in his business. The breakdown of cost for the automobiles is as follows:
New automobile #1: $27,000 + HST
New automobile #2: $50,000 + HST
Calculate the resulting CCA deduction(s) from business income for the above automobile purchases. The vehicles do not qualify for AIIP or Immediate Expensing. In addition, calculate the ending UCC balance for 2024. Show all calculations for marks.
4. As it turns out, the building owned and used by Mr. Fox for his business is no longer in the best of shape. He decides to renovate and move his business to the garage at his home. The building is sold for $90,000. After the sale, Mr. Fox no longer owns any further Class 1 assets.
Explain the effects of the above transaction when it comes to CCA and the Class 1 balance. Show all calculations for marks