# Examples of calculating the average cost of property

## Example 1

Over the years, Clara has bought and sold common shares of STU Ltd. This example shows how, after each purchase, the ACB of her shares changes after each purchase.

In 2001, Clara purchased 100 shares for \$1,500. The ACB is therefore \$15.00 (\$1,500 ÷ 100).

In 2006, she purchased an additional 150 shares for \$3,000. The new ACB is calculated by dividing the total cost of the shares of STU Ltd. (\$1,500 + \$3,000 = \$4,500) by the total number of shares she has purchased (100 + 150 = 250). Therefore, the ACB is \$18.00 (\$4,500 ÷ 250).

In 2008, she sold 200 shares for \$3,600. The ACB remains at \$18.00 per share.

In 2023, she purchased 350 shares for \$7,350. The new ACB is \$20.63 [(\$900 + \$7,350) ÷ (50 + 350)].

## Example 2

In 2001, Irina bought units of a mutual fund trust. When she bought them, Irina chose to reinvest her annual income distributions in additional units. This example shows how the ACB of her units changes after each purchase.

In 2001, Irina purchased 833.3333 units for \$15,000. The ACB is therefore \$18.00 (\$15,000 ÷ 833.3333).

In 2001, she reinvested distributions of \$1,170 by purchasing 59.8466 units at \$19.55 per unit. The new ACB is calculated by dividing the total cost of the units (\$15,000 + \$1,170 = \$16,170) by the total number of units she has purchased (833.3333 + 59.8466 = 893.1799). Therefore, the ACB is \$18.10 (\$16,170 ÷ 893.1799).

In 2002, she reinvested distributions of \$1,455.30 by purchasing 70.5429 units at \$20.63 per unit. The new ACB is \$18.29 [(\$16,170 + \$1,455.30) ÷ (893.1799 + \$70.5429 = 963.7228)].

In 2008, she earned \$7,316 by selling 400 units at \$18.29 per unit. The ACB remains at \$18.29 per share.

In 2023, she reinvested distributions of \$721.65 by purchasing 36.2821 units at \$19.89 per unit. The new ACB is \$18.38 [(\$10,309.30 + \$721.65 = \$11,030.95) ÷ (563.7228 + 36.2821 = 600.0049)].

Date modified: