Better Products Ltd.had annual net income of $20,000, CCA of $40,000, a 40 percent tax rate, a discount rate of 10 percent and annual cash sales of $200,000.The depreciable assets of Better Products belong in several different classes under the Income Tax Act, have a salvage value of zero at the end of six years, and were all bought new at the beginning of Year 1.What is the tax saving from CCA?
A)$16,000
B)$24,000
C)$36,000
D)$56,000
E)$14,400

Question

Quizplus · Accepted Answer

The tax saving from CCA is calculated as CCA multiplied by the tax rate: $40,000 * 0.40 = $16,000.