Question

ACB Company has the following information related to class 10 assets for the current​ year:

Beginning​ Balance: $154,000
Cost of​ additions: $14,000
​Dispositions, proceeds: $40,000 ​(original cost=​$70,000​)
The class 10 rate is 30​%. Using only this​ information, what is the maximum CCA deduction for the current year for class 10​ assets?
A. $38,400
B. $36,600
C. $46,200
D. $34,800

Answer 1

The maximum CCA deduction for class 10 assets is calculated as ($154,000 + $14,000 - $70,000) × 30%, which equals to $29,400. The provided options do not include the correct answer.

Step-by-step explanation:

The maximum CCA deduction for the current year for class 10 assets can be calculated using the given information. The formula for CCA deduction is the (Beginning Balance + Cost of Additions - Dispositions) × CCA Rate. Here, the dispositions are subtracted at their original cost, not the proceeds from the sale. So the calculation is as follows:

• Adjusted Beginning Balance = Beginning Balance + Cost of Additions - Original Cost of Dispositions
• Adjusted Beginning Balance = $154,000 + $14,000 - $70,000
• Adjusted Beginning Balance = $98,000
• CCA Deduction = Adjusted Beginning Balance × CCA Rate
• CCA Deduction = $98,000 × 30%
• CCA Deduction = $29,400

Therefore, none of the options (A, B, C, D) match the correct calculation, which is $29,400 for the maximum CCA deduction for the current year.