A financial planner is advising a client, Mr. Singh, who holds several non-registered investments. Mr. Singh recently sold 100 shares of ABC Corp for $50 per share. He had purchased these shares in two separate blocks: 50 shares at $30 per share and 50 shares at $40 per share. What is Mr. Singh's capital gain on the sale of ABC Corp shares, assuming no transaction costs?

Question: A financial planner is advising a client, Mr. Singh, who holds several non-registered investments. Mr. Singh recently sold 100 shares of ABC Corp for $50 per share. He had purchased these shares in two separate blocks: 50 shares at $30 per share and 50 shares at $40 per share. What is Mr. Singh's capital gain on the sale of ABC Corp shares, assuming no transaction costs?

Answer options:

• $1,000 ✅ $1,250
• $1,500
• $2,000

Correct answer: $1,250

Explanation: When identical properties are acquired at different times, the adjusted cost base (ACB) is calculated using the average cost method. Total cost = (50 shares * $30) + (50 shares * $40) = $1,500 + $2,000 = $3,500. Total shares = 100. Average cost per share = $3,500 / 100 = $35. Proceeds = 100 shares * $50 = $5,000. Capital Gain = $5,000 - $3,500 = $1,500.