On January 1, 2010, Olds Company purchased a machine costing $250,000.The machine is an asset class for tax purposes with a CCA rate of 30%.It has an estimated $40,000 residual value at the end of its economic life.Assuming the company uses the capital cost allowance method, the amount of CCA deduction for tax purposes for the year
2010 is

Question

Quizplus · Accepted Answer

The CCA deduction is calculated using the declining balance method. For the first year, the half-year rule applies, so the base amount is $250,000 / 2 = $125,000. The CCA rate is 30%, so the CCA deduction is $125,000 * 30% = $37,500.

On January 1, 2010, Olds Company Purchased a Machine Costing