Question

a business sold an old passenger vehicle that had an original cost of $25,000, undepreciated capital cost (ucc) of $10,000 and was sold for $8,000. no other vehicles were in the pool. the new passenger vehicle cost $35,000. what would be the maximum deduction that would be claimed in the year? question 13select one: a. $14,100 b. $15,500 c. $7,000 d. $12,900

Answer 1

The maximum deduction that can be claimed in the year is $32,000.

Step-by-step explanation:

To determine the maximum deduction that can be claimed in the year, we need to calculate the capital cost allowance (CCA) for the old passenger vehicle and subtract it from the cost of the new vehicle.

The CCA is calculated by multiplying the undepreciated capital cost (UCC) by the CCA rate applicable to the class of the vehicle.

In this case, the UCC is $10,000 and the new vehicle cost is $35,000.

Assuming a CCA rate of 30% for the class of the old vehicle, the CCA would be $10,000 * 0.3 = $3,000.

Therefore, the maximum deduction that can be claimed in the year is $35,000 - $3,000 = $32,000.