C.W. Piping manufacturing company produces PVC pipes and drainage ducts for use

Question

C.W. Piping manufacturing company produces PVC pipes and drainage ducts for use in the agriculture industry. The table belowshows a list of the major equipment currently owned by the company and current book value. 38 Equipment Book Value | CCA Class CCA Rate 2 Trucks $30,000 16 40% 1 Fork Lift $14,000 30% Poly Vinyl Patent | $10,000 44 25% 1 Factory Building $240,000 4% (48) If the company purchases a second forklift for $12,000 at the beginning of next year, the depreciation deduction for asset class 38 at the end of next year is close to: a) $3,640 b/$4,730 c) $5,900 d) $7,810 Considering the purchase of the 2nd forklift, the book value of the company's assets at the end of next year is close to: a) $242,670 b) $244,480 c) $288,150 (d) $254,910

Explanation / Answer

1) If a company purchases a second forklift for $12,000 at the beginning of next year, the depreciation deduction for asset class 38 at the end of the next year is close to

Solution: $4730

Working: Asset class 38

BV

Tax rate

Dep

Balance

14000

30%

4200

9800

9800

30%

2940

2940+ 12000 * 30% *1/2 = 4740

Selecting the nearest option

2) Considering the purchase of the 2nd forklift, the book value of the company's assets at the end of next year is close to

Solution: $254910

Working:

2 Trucks

30,000

40%

12000

18000

18000

21,000

40%

4200

16800

Poly Vinyl Patent

10,000

25%

2500

7500

7500

7,000

25%

875

6125

1 Factory Building

240,000

4%

9600

230400

230400

168,000

4%

3360

164640

255900

BV

Tax rate

Dep

Balance

14000

30%

4200

9800

9800

30%

2940

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