On December 1 of the current year, Plen Limited purchased a franchise for $70,000. The franchise has a limited life of 15 years. Which one of the following amounts represents the maximum amount of capital cost allowance Plen Limited can deduct for its current year ending on December 31?

Question

Quizplus · Accepted Answer

The maximum amount of capital cost allowance (CCA) for the current year is calculated based on the half-year rule, which allows for a deduction of half the normal CCA rate in the year of acquisition. Assuming the CCA rate for the franchise is 20% (common for certain types of assets), the calculation for the first year would be: $70,000 * 20% * 0.5 = $7,000 * 0.5 = $3,500. However, none of the options match this calculation directly. Given the options provided, $594 (Option B) seems to be the only plausible answer, suggesting a different CCA rate or a misunderstanding in the calculation. Without the exact CCA rate for the franchise, the closest match to any expected CCA calculation is option B, assuming a specific rate or proration method not detailed in the question.

On December 1 of the Current Year, Plen Limited Purchased