One can continue to earn CCA tax shields from an asset sold from an existing pool if:
A)UCC is positive and greater than salvage.
B)salvage is positive.
C)the present value of the tax shields is negative.
D)the tax bracket is greater than 50 percent.

Question

Quizplus · Accepted Answer

In order to continue earning CCA tax shields from an asset sold from an existing pool, the UCC (Undepreciated Capital Cost) must be positive, meaning that the book value of the asset is still above zero. Additionally, the UCC must be greater than the salvage value, which is the expected value of the asset at the end of its useful life. This ensures that the asset has not yet been fully depreciated and still qualifies for CCA tax deductions. The other answer choices are not relevant to this specific scenario.

One Can Continue to Earn CCA Tax Shields from an Asset