The depreciation method that is allowable under the Income Tax Act is referred to as
A)Straight-line.
B)Diminishing balance.
C)Capital cost allowance.
D)Units of depletion.
E)All are allowed.

Question

Quizplus · Accepted Answer

The method of depreciation that is allowable under the Income Tax Act is Capital Cost Allowance (CCA). This method allows businesses to deduct a portion of the cost of their assets each year for tax purposes. Both straight-line and declining balance methods are allowed under CCA, but the specific rate of depreciation and the method used to calculate it vary depending on the type of asset. Units of depletion, on the other hand, are used to calculate the depreciation of natural resources like oil and gas, and are not relevant to most businesses. Therefore, C is the best choice.

The Depreciation Method That Is Allowable Under the Income Tax