Suppose a ﬁrm has a negative UCC balance. They:
A) Can claim the amount as a tax deductible expense.
B) Must add the amount (as a positive number) to their taxable income.
C) Should sell off all items in the asset pool.
D) Can calculate CCA for the year using the negative balance.
E) Should use the negative amount as a future tax loss.

Question

Quizplus · Accepted Answer

A negative UCC (Undepreciated Capital Cost) balance indicates that the firm has claimed more depreciation than the cost of the assets. This excess must be added back to taxable income, as it represents an over-claimed deduction.

Suppose a ﬁRm Has a Negative UCC Balance