ABC Enterprises began operations on September 1 of the current year. It has chosen December 31 as its year end. On October 1 of the current year, the proprietorship purchased furniture and fixtures for $40,000. The maximum capital cost allowance on the furniture and fixtures for the current year ending December 31 will be:
A)$ 2,673.97.
B)$ 4,010.96.
C)$12,000.00.
D)$ 8,000.00.

Question

Quizplus · Accepted Answer

The half-year rule applies to capital assets. For the current year, since the furniture and fixtures were acquired on October 1, they were in service for only 92/365 days (including the date of acquisition but excluding the date of disposition). Thus, the maximum CCA for the current year will be 20% x $40,000 x 92/365 = $4,010.96. Therefore, the correct answer is B.

ABC Enterprises Began Operations on September 1 of the Current