Use the following information to answer questions
Tarantula Corp.reported the following information about the only machine that it owns: Tarantula uses straight-line depreciation to the nearest month for accounting purposes.
-Assuming Tarantula always takes the maximum CCA, what is the CCA for calendar 2017?
A)$22,500
B)$30,000
C)$45,000
D)$60,000

Question

Use the following information to answer questions 
Tarantula Corp.reported the following information about the only machine that it owns:  Tarantula uses straight-line depreciation to the nearest month for accounting purposes.
-Assuming Tarantula always takes the maximum CCA, what is the CCA for calendar 2017?
A)$22,500 
B)$30,000 
C)$45,000 
D)$60,000

Quizplus · Accepted Answer

The CCA for the first year is calculated using the half-year rule, which allows for half of the CCA rate to be claimed in the year of acquisition. Since the machine was acquired in November 2016, only 1/12 of the CCA rate can be claimed for that year. 
The maximum CCA rate for Class 8 (which this machine falls under) is 20%. Therefore, the CCA for 2017 would be calculated as follows: 
(20% x $150,000) x 11/12 = $27,500. 
However, since the question asks for the maximum CCA, we round up to the nearest multiple of $1,000, which gives us a final answer of $30,000.

Use the Following Information to Answer Questions