Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-What does capital cost allowance represent?
A) an amount used to calculate the book value of capital assets
B) an amount used to calculate the residual value of fixed assets
C) Canada Revenue Agency's equivalent of accumulated depreciation
D) Canada Revenue Agency's equivalent of depreciation

Question

Cost of the asset$100,000 
Life of the asset 5 years 
Depreciation rate20% 
Capital cost allowance rate 50% 
Residual value of the asset nil 
Income tax rate 50%
-What does capital cost allowance represent?
A) an amount used to calculate the book value of capital assets
B) an amount used to calculate the residual value of fixed assets
C) Canada Revenue Agency's equivalent of accumulated depreciation
D) Canada Revenue Agency's equivalent of depreciation

Quizplus · Accepted Answer

Capital cost allowance (CCA) is the term used in Canada for tax purposes to represent the depreciation of assets, similar to how depreciation is used in accounting.

Cost of the Asset$100,000