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The income statement that has been prepared by Recon Ltd$.$s accountant for the current year ending July $30$ is as follows:

Sales Revenue $750,000$

Cost of Goods Sold $270,000$

Gross Profit $480,000$

Operating Expenses:

Salaries and Wages $118,000$

Interest and Property taxes $22,000$

Amortization expense $($see Note $1)56,000$

Charitable donations $2,700$

Life Insurance $($see Note $2)6,600$

Meals and Entertainment $($see Note $3)31,000$

Repairs and Maintenance $($see Note $4)62,000$

Other operating expenses $62,000360,300$

Operating income $119,700$

Other revenue and expenses

Loss on sale of delivery vans $-56,000$

Interest revenue $3,300$

Gain on sale of shares $($Note $5)10,800$

Dividends from taxable Canadian corporations $7,200-34,700$

Income before taxes $85,000$

Income tax expense $6,750$

Income after taxes $78,250$

Note $1$: Recon$$s assets include:

Cost NBV UCC

Land $350,000375,000$

Building $560,000380,000340,000$

Furniture and equipment $325,000117,00097,150$

Delivery vans $320,000186,000115,280$

During the year, Recon decided it would most cost effective to rent delivery vans as necessary than own the vehicles. Proceeds of $$123,500$ were received on the sale of the vans. New equipment and furniture was purchased for $$50,500.$

Note $2$: Recon carries a life insurance policy on the major shareholder to ensure the company can survive until personnel can be replaced or redeployed in the event of his death.

Note $3$: Meals and Entertainment expense included $$5,000$ to sponsor local children$$s sports teams. The remainder was spent while entertaining clients.

Note $4$: $$23,000$ was spent to replace leaking windows. The balance was spent to install a sky light above the employee breakroom.

Note $5$: Recon sold shares for proceeds of $$22,000.$ The shares had an original cost of $$13,500.$

Note $6$: Recon has $$4,800($from $1997)$ in their net capital loss pool, and a $$12,700($from $2007)$ balance in their non$-$capital loss carryover pool.

REQUIRED: Ignore the temporary provision allowing immediate expensing of assets on pages $276$ to $278$ of your textbook.

Assignment $1$ Capital Cost Allowance Schedule $($CCA$)$:

Using an Excel workbook, prepare the CCA schedule in good form for Recon Ltd$.$ You may use the vertical format as in the textbook:

CCA Schedule $($Alternative to Schedule $8)$

ITEM CL

$\%$ CL

$\%$ Notes

UCC Beginning

$(+)$ Additions

$(-)$ Disposals

Net additions $$ disposals

$(-)$ Half Year Rule or $(+)$ AccII Adjustment

$(=)$ UCC before CCA

Recapture

Terminal loss

Max CCA permitted

$(-)$ CCA Deduction

$(+)$ Half Year Rule or $(-)$ AccII Adjustment

$(=)$ UCC Beginning next$$fiscal$$period

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