Final answer:
Capital cost allowance is the tax method of expensing the acquisition costs of long-lived assets over time, used to reduce taxable income by deducting the depreciated value of an asset.
Step-by-step explanation:
Capital cost allowance is the tax method of expensing the acquisition costs of long-lived assets over time. This accounting practice allows businesses to deduct the depreciated value of an asset from their taxable income, which can reduce the amount of tax payable. Under this system, rather than expensing the entire cost of an asset in the year of purchase, the cost is spread over the useful life of the asset, reflecting its consumption, wear and tear, or obsolescence.
It is important to note that the capital cost allowance does not record the decrease in fair market value of long-lived assets over time. Rather, it is a method used specifically for tax purposes to recognize the costs associated with acquiring business capital assets. It does not relate directly to government assistance or the acquisition of business-related costs.