A1A is a proprietorship that has a calendar fiscal year. The proprietorship begins operations on April...
A1A is a proprietorship that has a calendar fiscal year. The proprietorship begins operations on April 1, 2020 and acquires a machine on December 1, 2020.
The machine has a cost of $22,000 and A1A incurs an additional $5,800 in expenses for installation. The machine is a Class 8 asset with a rate of 20%.
What is the maximum CCA deduction A1A can take on this asset for the April 1 to December 31, 2020 fiscal year?
Choose the correct answer. (Round your answer to the nearest dollar.)
A. $4,189
B. $8,340
C. $6,284
D. $2,095
Homework Answers
Calculation of CCA:
Total cost = Purchase Cost plus installation expenses = $(22000+5800) = $27800
Half year rule will be applied as this is first year of CCA deduction.
CCA = 27800* 1/2 * 20% * 275/365 = $ 2095
(Number of days are calculated from 1st April to 31st Dec, 2020 i.e. from the date of start of business operations = 275 days)
Correct answer is D. $ 2,095
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