Use the following information to answer questions:
Tarantula Corp. reported the following information about the only machine that it owns:
Date of purchase..............................March 31, 2020
Capital cost................................ $ \$ 200,000 $
Estimated useful life......................10 years
Estimated residual value................ $ \$ 20,000 $
CCA Class..................................Class $ 10(30 \%) $ Tarantula uses straight-line depreciation to the nearest month for accounting purposes.
-Assuming Tarantula always takes the maximum CCA, what is the CCA for calendar 2020?
A) $22,500
B) $30,000
C) $45,000
D) $60,000

Question

Use the following information to answer questions:
Tarantula Corp. reported the following information about the only machine that it owns:
 Date of purchase..............................March 31,  2020
Capital cost................................ $ \$ 200,000 $
Estimated useful life......................10 years
Estimated residual value................ $ \$ 20,000 $
CCA Class..................................Class $ 10(30 \%) $  Tarantula uses straight-line depreciation to the nearest month for accounting purposes.
-Assuming Tarantula always takes the maximum CCA, what is the CCA for calendar 2020?
A) $22,500
B) $30,000
C) $45,000
D) $60,000

Quizplus · Accepted Answer

The maximum CCA for Class 10 is 30% of the capital cost, which gives $ 0.3 \times \$ 200,000 = \$ 60,000 $ for the first year. However, since the machine was purchased on March 31, 2020, Tarantula can only claim 9/12 of that amount for 2020, which gives $ 9/12 \times \$ 60,000 = \$ 45,000 $. Therefore, the best choice is B.

Use the Following Information to Answer Questions: Tarantula Corp $200,000 \$ 200,000 $200,000

Use the Following Information to Answer Questions:
Tarantula Corp $\$ 200,000$