Chapter 5 CCA Practice Questions 2024.

Chapter 5 CCA Practice Questions 2024. 17) Capital cost allowance is analogous to the accounting term amortization and allocates the cost of 17) the capital asset to current and subsequent taxation years. - ANSWER T 18) Undepreciated capital cost is decreased by government assistance received to acquire assets and 18) increased by acquisitions of depreciable assets. - ANSWER T 19) Capital cost allowance for each class can be calculated using the declining balance method or the 19) straight line method, as long as it is the same method used to calculate amortization for thefinancial statements. - ANSWER F 20) A corporation with a June 30 year end begins its operations on January 1 of the current year. It 20) acquires $50,000 of Class 8 assets on March 1. The maximum CCA for its fiscal year ending June 30of the current year is $15,000. - ANSWER F 21) If a patent is acquired near the end of its legal life, it will usually be a good idea to elect to include 21) its cost in Class 14. - ANSWER T 22) The separate class election for photocopiers should be used only if the assets are retained and used 22) for long periods of time. - ANSWER F 23) Recapture of CCA occurs when there is a negative balance in the class at the end of the year. - ANSWER T 24) Only one-half of a terminal loss can be deducted in the determination of a taxpayer's Net Income 24) For Tax Purposes. - ANSWER F 25) The cost of each rental property owned by a taxpayer must be allocated to a separate CCA Class. - ANSWER F 26) Goodwill is purchased for $60,000 during the year. There are no other assets in Class 14.1. The 26) maximum CCA that can be deducted for tax purposes for the year is $3,000. - ANSWER F 27) Of the following pairs of terms, which pair represents terms that are analogous for accounting 27) work and for tax work? A) Undepreciated Capital Cost and Acquisition Cost. B) Capital Cost and Amortization. C) Amortization and Capital Cost Allowance. D) Capital Cost and Net Book Value. - ANSWER C