How to find deadweight loss

how to find deadweight loss

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Instructions

Find your undepreciated capital cost increases and decreases for each different asset class you have. The undepreciated capital cost increases and decreases are a separate calculation from the terminal loss and recapture. For example, you had a undepreciated capital cost increase of $2,000 on a Class 1 asset, a undepreciated capital cost decrease of $4,000 on a different Class 1 asset, a undepreciated capital cost increase of $5,000 on a Class 3 asset and a undepreciated capital cost decrease of $1,000 on a different Class 3 asset.

Net together the undepreciated capital cost increases and decreases for each asset class. You may have several different asset classes that you need to net together. In the example, net together

the Class 1 assets, then net together the Class 3 assets. So, a $2,000 increase plus a $4,000 decrease equals a $2,000 undepreciated capital cost decrease on Class 1 assets. Then, a $5,000 increase plus a $1,000 decrease equals a $4,000 increase on Class 3 assets.

Classify any positive number from netting the undepreciated capital cost increases and decreases for each asset class as a terminal loss. Classify any negative number from netting the undepreciated capital cost increases and decreases for each asset class as recapture. Typically, a terminal loss is a decrease in income and a recapture is an increase in income. Since Class 1 assets decreased $2,000, the $2,000 of recapture income. The $4,000 increase in Class 3 assets is a terminal loss.

Source: ehow.com

Category: Forex

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