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Wayne Hughes: Okay class, today we're doing the second topic in our capital cost allowance
examples. Previously, we did the transaction related to pro-rating a short year-end. And
now the second transaction I want to illustrate is the half-year rule. So, we'll just go to
the transaction, these are the sample transactions we began in the first class, and we're doing
the second transaction. The second transaction illustrates how the half-year rule is used,
in that the company purchases more equipment for $18,000, and they sell some equipment
that they previously purchased for $5,000. So, if we go to the CCA schedule, the UCC
is the carry-forward from the previous year, so we'll have to enter in the UCC in the -for
the beginning of the year. (Enter in the UCC there) for $112,878. So that's just carried
forward from the previous year, and the cost of addition of $18,000 is added in, in column
3, and then the disposal of $5,000 is entered in column 5, and the addition is added in
to the UCC and the disposal is deducted and the column 7 is the half-year rule illustrated
where it takes the $18,000 minus the $5,000, which is $13,000 divided by 2. That's how
the half-year rule is calculated, and that is deducted from column 6, and then we apply
the rate to column 8. So, its 20%, and, so then the capital cost allowance in Year 2
is $23,876 leaving an ending UCC of $102,002.
So that illustrated the half-year rule, and so that's our second lesson today class and
so, we're finished for today. Have a good day, thank you!