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 incremental undepreciated capital cost (UCC)for year 2?

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The total cost of the bins including delivery and installation is $45,000 each ($40,000 + $5,000). For 1,000 bins, the total cost is $45,000,000. In the first year, the CCA at 25% would be $11,250,000 ($45,000,000 * 25%). The incremental undepreciated capital cost (UCC) for year 2 is the initial cost minus the first year's CCA, which is $45,000,000 - $11,250,000 = $33,750,000. However, since the question asks for the incremental UCC for year 2, we calculate the CCA for the second year on the remaining UCC. The second year's CCA is 25% of $33,750,000, which is $8,437,500. Subtracting this from the year 1 UCC gives us the incremental UCC for year 2: $33,750,000 - $8,437,500 = $25,312,500. It appears there was a mistake in my calculation; the correct answer based on the provided options isn't listed due to a calculation error in determining the incremental UCC for year 2. The correct process involves calculating the total cost and applying the CCA rate, but the final calculation should align with the options given. Reevaluating the correct approach: The total cost is $45,000,000, and after applying the first year's CCA, we subtract this from the total cost to find the UCC for the beginning of year 2, which is not directly asked but is part of finding the year 2 depreciation. The error was in the interpretation of "incremental UCC for year 2," which typically would involve calculating depreciation for the second year and adjusting the UCC accordingly. Given the options and the typical calculation method for CCA, none directly match the expected outcome of the described calculation process, indicating a misunderstanding in the application of the CCA for the second year based on the options provided. Revisiting the calculation and the options provided, it seems there was a misinterpretation in my explanation. The correct answer should be based on the initial calculation of the cost and the application of the CCA rate, but without further calculations that were not correctly aligned with the options given.

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