Required: For the taxation year ending December 31, 2020, calculate the maximum CCA that can be deducted in class1 and class 8 by Chatterbox Inc. In addition, indicate if there are any other tax consequences to each transaction. Please show all work.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Hello please help

Chatterbox Incorporated has a fiscal year-end of December 31, 2020. On January 1, 2020, the company had the following
information for their CCA classes:
Class 1 - The buildings in Class 1 were acquired in January 2009 at a cost of $734,000, with $84,000 of this total being
allocated to land. The UCC balance on January 1, 2020 was $562,154.
Class 8 - The equipment in Class 8 was acquired in January 2014 at a cost of $78,500. The UCC balance on January 1, 2020,
was $23,520.
During the 2020 fiscal year, Chatterbox Inc. sold the following:
- Sold all the existing equipment and replaced it with improved equipment that will be leased going forward. The old
equipment sold for $32,500
- The company CFO rendered a similar decision regarding the buildings. The buildings were sold for $825,000 and
replaced with leased premises. Of the $825,000 received, $100,000 is related to the land on which the buildings are
situated
Required: For the taxation year ending December 31, 2020, calculate the maximum CCA that can be deducted in class 1
and class 8 by Chatterbox Inc. In addition, indicate if there are any other tax consequences to each transaction. Please
show all work.
Transcribed Image Text:Chatterbox Incorporated has a fiscal year-end of December 31, 2020. On January 1, 2020, the company had the following information for their CCA classes: Class 1 - The buildings in Class 1 were acquired in January 2009 at a cost of $734,000, with $84,000 of this total being allocated to land. The UCC balance on January 1, 2020 was $562,154. Class 8 - The equipment in Class 8 was acquired in January 2014 at a cost of $78,500. The UCC balance on January 1, 2020, was $23,520. During the 2020 fiscal year, Chatterbox Inc. sold the following: - Sold all the existing equipment and replaced it with improved equipment that will be leased going forward. The old equipment sold for $32,500 - The company CFO rendered a similar decision regarding the buildings. The buildings were sold for $825,000 and replaced with leased premises. Of the $825,000 received, $100,000 is related to the land on which the buildings are situated Required: For the taxation year ending December 31, 2020, calculate the maximum CCA that can be deducted in class 1 and class 8 by Chatterbox Inc. In addition, indicate if there are any other tax consequences to each transaction. Please show all work.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education