Class 52 vs Assets

by Kallie
(Ontario, Canada)

1. It's January, 2011. I just purchased new computers with Windows 7, Office, and Antivirus. Other than the HST, do I record the entire amount of the purchase as an asset or just the computer hardware and expense the software?

2. Also, I only have 2 fixed asset accounts, furniture & fittings and office equipment. Do I need to create a new fixed asset account or can I add it to one of the existing?

3. Further, when doing the corporate return, I would guess I have to create the new class 52 with a 100% rate, but if I don't need to claim the allowance (if a loss) can I use the 100% in later years or is it just for the first year, so in other words take it or lose it?

4. Finally, since I am a little confused by all of this, does recording depreciation in the books have anything to do with the CCA claimed on the return?

Thanks for any help you (or anyone else) can offer.

Hi Kallie,

While responding to your questions, I'm going to point you to some chats and/or posts on this site. After reading them, make sure you post back if you need clarification on anything.

1. See the tip for recording the purchase of a new computer and software. You'll find it in the second paragraph after "CCA class 52".

The tip explains you have to classify operating software in class 12 and systems software in class 52.

I would define operating software as Office and Antivirus. Windows 7 is systems software as it was purchased as part of the computer itself.

2. You could add the computer to your existing Office Equipment account but ... I like to use my chart of accounts to help make my bookkeeping easier and reduce yearend reconciliations as much as possible.

I would create a new account called Computer-Class 52 with two sub-accounts. One called Original Cost and one called Accumulated Amortization. It will help you reconcile the timing differences between your CCA claimed on your tax return and the amortization booked on your financial statements.

I would also create a new account called Computer Software-Class 12 with two sub-accounts. One called Original Cost and one called Accumulated Amortization. Again, it will help you reconcile the timing differences between your CCA claimed on your tax return and the amortization booked on your financial statements.

3. At the very end of the CCA chat I directed you to in the link above, you will find a section called Here is another one of the things you should know about CCA. It explains your options in claiming CCA.

4. Reading the bookkeeping forum post CCA and Deferred Tax should help clarify your confusion regarding the relationship between depreciation and CCA.









P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.