FMT4 Problem: CCA - Blake Incorporated

FMT4 Problem: CCA - Blake Incorporated

Blake Inc. leased office space for business use in 2003. The terms of the lease include a 5 year

initial term with 2 options for renewal of 2 years each. The annual rental charge for the lease is

$120,000 including parking. During 2004, Blake undertook significant improvements to the

leased office space, incurring costs of $80,000. Further improvements were made in 2005 at a

cost of $20,000.

Required:

a. Calculate the amount of CCA that Blake may claim in relation to the leasehold for 2005.

b. Blake anticipates further improvements in 2006 in the amount of $10,000 and wishes to

know the amount of CCA which would be deductible in 2006.