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%
-A company has paid $200,000 for a capital asset that has an estimated life of five years and a salvage value of $50,000. What is the accumulated depreciation at the end of year four?
A) $ 80,000
B) $ 100,000
C) $ 120,000
D) $ 140,000

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%
-A company has paid $200,000 for a capital asset that has an estimated life of five years and a salvage value of $50,000. What is the accumulated depreciation at the end of year four?
A) $ 80,000
B) $ 100,000
C) $ 120,000
D) $ 140,000

Quizplus · Accepted Answer

The asset is depreciated using the straight-line method: (Cost - Salvage Value) / Life = ($200,000 - $50,000) / 5 = $30,000 per year. After four years, accumulated depreciation is 4 * $30,000 = $120,000.

Cost of the Asset$100,000