FMT6 Problem: CCA - Ranger Incorporated

FMT6 Problem: CCA - Ranger Incorporated

Ranger Inc., a Canadian public company with a December 31st year end has the following

balances in the CCA classes for its assets at January 1, 2005.

Class 1 (4%) – Building $1,150,000

Class 43 (30%) – Manufacturing Equipment 217,000

Class 8 (20%) – Office Furniture and Equipment 155,000

Class 10 (30%) – Delivery trucks 67,000

During the year, Ranger Inc. decided to significantly alter its business model. As a result, the

following occurred:

1. Ranger Inc. sold its building and entered into a lease for a new office building. The

building, which originally cost $1,300,000, was sold for $1,400,000.

2. All manufacturing would be subcontracted out. Accordingly, the manufacturing

equipment was sold for $180,000. The equipment was originally purchased for

$250,000.

3. Additional office furniture was purchased at a cost of $27,000. In addition, office

furniture was sold for $35,000 (original cost $22,000).

4. Ranger sold one of its trucks for $20,000 (original cost $25,000) and purchased a used

truck for $8,000.

Required:

Calculate the maximum CCA claim for 2005. Identify any other tax issues arising from the

above transactions.