A ﬁrm has recently purchased Class 10 equipment for $100,000 with a CCA rate of 30%. Under the half-year rule, what is the amount of depreciation that the ﬁrm can claim as a tax-deductible
Expense in the second year?

Question

Quizplus · Accepted Answer

Under the half-year rule, only half of the CCA rate (which is 30%) can be claimed in the first year. Therefore, in the first year, the firm can claim a tax-deductible expense of $15,000 (30% x $100,000 x 0.5 = $15,000). In the second year, the remaining CCA rate of 15% can be claimed, which is $15,000 (30% x $100,000 x 0.5 x 0.5 = $7,500) multiplied by 2 for the second year, resulting in a total tax-deductible expense of $15,000 + $15,000 = $25,500. So, the correct answer is D.

A ﬁRm Has Recently Purchased Class 10 Equipment for $100,000