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.
-Assume that at the end of calendar 2019, the UCC for this machine is $83,300.Tarantula sells the machine on January 2, 2017 for $90,000, and does not replace it.The recapture of CCA or terminal loss would be
A)$60,500 terminal loss.
B)$56,000 recapture.
C)$6,700 terminal loss.
D)$6,700 recapture.

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.
-Assume that at the end of calendar 2019, the UCC for this machine is $83,300.Tarantula sells the machine on January 2, 2017 for $90,000, and does not replace it.The recapture of CCA or terminal loss would be
A)$60,500 terminal loss. 
B)$56,000 recapture. 
C)$6,700 terminal loss. 
D)$6,700 recapture.

Quizplus · Accepted Answer

The recapture of CCA occurs when the sale price of the asset exceeds its undepreciated capital cost (UCC). Here, the machine is sold for $90,000, which is higher than the UCC of $83,300, resulting in a recapture of $6,700.

Use the Following Information to Answer Questions