On January 1st last year you bought an asset for $100,000. On January 1st this year, you sell it for $85,000. For financial reporting purposes, it will be depreciated using straight line depreciation over its expected ten year life. For income tax reporting it qualifies for a CCA rate of 40% declining balance (it is the only asset in the CCA pool). The company's tax rate is 30%. a) How will the sale be reported in the financial statements, what will be the effect on taxes payable? b) How will the sale be reported on the income tax statement, what will be the effect on taxes payable?

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The Answer of On January 1st last year you bought an asset for $100,000. On January 1st this year, you sell it for $85,000. For financial reporting purposes, it will be depreciated using straight line depreciation over its expected ten year life. For income tax reporting it qualifies for a CCA rate of 40% declining balance (it is the only asset in the CCA pool). The company's tax rate is 30%. a) How will the sale be reported in the financial statements, what will be the effect on taxes payable? b) How will the sale be reported on the income tax statement, what will be the effect on taxes payable?

On January 1st Last Year You Bought an Asset for $100,000