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 equity include?
A) preferred shares and loans to owners
B) contributed surplus and future income taxes
C) common shares and retained earnings
D) common shares and mortgage

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 equity include?
A) preferred shares and loans to owners
B) contributed surplus and future income taxes
C) common shares and retained earnings
D) common shares and mortgage

Quizplus · Accepted Answer

Equity typically includes common shares and retained earnings, representing the ownership interest in a company. Preferred shares are a part of equity, but loans to owners are a liability. Contributed surplus and future income taxes are part of shareholders' equity but are not the primary components. Mortgages are a form of debt, not equity.

Cost of the Asset$100,000