Longbow Lumber is purchasing a new horizontal resaw at a cost of $450,000.There is an additional $15,000 delivery and installation cost.The machine has a capital cost allowance (CCA)rate of 25%.What is the incremental undepreciated capital cost (UCC)for year 1?

Question

Quizplus · Accepted Answer

The incremental UCC for year 1 is the cost of the resaw plus the delivery and installation cost, less the CCA for the year. The CCA for the year is 25% of the cost of the resaw, or $112,500. Therefore, the incremental UCC for year 1 is $450,000 + $15,000 - $112,500 = $232,500.

Longbow Lumber Is Purchasing a New Horizontal Resaw at a Cost