Introduction to Federal Income Taxation in Canada 43rd Edition 2022-2023

Edition by Nathalie Johnstone , Devan Mescall , Julie Robson Test bank Sample

(b) $35,714

(c) $7,143

(d) $8,929

23) Mega Ltd., which has a May 31 year-end, had its factory vandalized in August 2022. The vandals managed to completely destroy a valuable piece of machinery. This was a customdesigned manufacturing asset included in class 53 and is the only asset in the class. The destroyed machinery had an original cost of $500,000 and a May 31, 2022 undepreciated capital cost of $187,500. Mega received insurance proceeds of $345,000 for the destroyed machinery. Due to advances in technology, a new machine cost only $280,000 and was in place for use by December 1, 2022. What is the impact on income for tax purposes to Mega for its taxation year ended May 31, 2023 in respect of the above machinery?

(a) Recapture of $157,500

(b) CCA of $91,875

(c) CCA of $61,250

(d) CCA of $122,500

24) Mrs James died on September 30, 2022. At the date of her death, she had the following capital assets, which were left to the beneficiaries indicated.

What is the minimum amount that must be included in Mrs. James income for her final tax return in respect of the above assets?

(a) $190,000

(b) $127,500

(c) $135,000

(d) $82,500