Your firm purchased a line of computer equipment for $1.5M four years ago. It is assigned a CCA rate of 20% and the firm has a tax rate of 35%. At the end of this year (year 4 for the machine) you decide to sell the computer equipment and as a result you will terminate the asset pool. Calculate the tax implications under the following scenarios and classify each as a terminal loss, CCA recapture, or neither.
a.You sell the equipment for $691,200.
b.You sell the equipment for $2,000,000.
c.You sell the equipment $1,000,000.
d.You sell the equipment for $500,000.
e.The equipment is worthless.
The question belongs to Finance and it is about CCA or capital cost allowance for a machine for 4 years with tax rate of 35%. The old machine is being sold off and proceeds will into CCA. Resultant tax has to be calculated.
Total Word Count NADownload Full Solution
If you are here for the first time, you can request for a discount coupon, which can knock off upto 20% of the quoted price on any service.