Athabasca Ag is purchasing 1,000 grain bins at a cost of $40,000 each.Each bin also has a $5,000 delivery and installation cost,and the bins have a capital cost allowance (CCA)rate of 25%.What will be the CCA deduction for year 1?

Question

Quizplus · Accepted Answer

Cost of one grain bin with delivery and installation cost = $40,000 + $5,000 = $45,000
Total cost of 1,000 grain bins = $45,000 x 1,000 = $45,000,000
CCA rate = 25%
CCA deduction for year 1 = 25% x $45,000,000 = $11,250,000
Therefore, the correct answer is B ($5,625,000 is not the correct answer as it is half the value of the correct answer which is $11,250,000. All other answer choices are also incorrect).

Athabasca Ag Is Purchasing 1,000 Grain Bins at a Cost