Sharma Inc. has determined that, for the current year, it has Taxable Income before the deduction of CCA of $14,000. At the end of the year, before the deduction of CCA, the following UCC balances are present: There have been no additions to or dispositions from these classes during the year. It is the policy of the Company to limit CCA deductions to an amount that would reduce Taxable Income to nil. Given this policy, which class(es)should be charged for the $14,000 of CCA that will be required to reduce Taxable Income to nil? Explain your conclusion.

Question

Sharma Inc. has determined that, for the current year, it has Taxable Income before the deduction of CCA of $14,000. At the end of the year, before the deduction of CCA, the following UCC balances are present:  There have been no additions to or dispositions from these classes during the year. It is the policy of the Company to limit CCA deductions to an amount that would reduce Taxable Income to nil. Given this policy, which class(es)should be charged for the $14,000 of CCA that will be required to reduce Taxable Income to nil? Explain your conclusion.

Quizplus · Accepted Answer

The Answer of Sharma Inc. has determined that, for the current year, it has Taxable Income before the deduction of CCA of $14,000. At the end of the year, before the deduction of CCA, the following UCC balances are present:  There have been no additions to or dispositions from these classes during the year. It is the policy of the Company to limit CCA deductions to an amount that would reduce Taxable Income to nil. Given this policy, which class(es)should be charged for the $14,000 of CCA that will be required to reduce Taxable Income to nil? Explain your conclusion.